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When you give your monthly mortgage payment to a lender they do not put it under a mattress. Your lender lends it out again each month. This is called deemed reinvestment. The M2PRO software has a feature that allows the SPREADSHEET to calculate the total of what regular deposits will accumulate to over a given amount of time, when the payments are set to zero in the speadsheet. You are actually performing a Present Value Future Value calculation in an expanded grid format. A monthly example is shown; however a weekly or biweekly scenario can also be calculated. Any of the following payment or deposit frequencies are available. 1,2,4,12,24,26 & 52. The type of compounding and the deposit frequency dramatically influence the accumulation amount for your retirement. Assume you want to invest $367 per month for the next 25 years and you want a 15% annual compounded growth. What would monthly deposits of $367 accumulate to in 25 years? Answer: $999,943.42 almost one million dollars. The solution is as follows. Think of it as a loan, then change your mind! First calculate the Principal that could be borrowed by making monthly payments of $367 for the next 25 years utilizing annual compounding. The calculator will automatically calculate a Principal of $30,375.92 under those conditions. You then click on the spreadsheet and change all the payments in the payment column to zero up to the 300th payment and the accumulation of $999,943.42 is immediately shown on the 300th payment line (highlighted in yellow). It is interesting to note, that if you use any financial calculator for that matter and enter a Present Value of 30,375.92, 15% as the Interest Rate per Period for 25 years the calculated Future Value would be $999,943.47 What this means is, as follows. You could make a one time deposit $30,375.92 and leave it in an account that paid 15% per year (an annual compounded rate of 15%) for 25 years. At the end of the 25 years it would grow or accumulate to $999,943.47 Do not be alarmed that the dollar values never agree to the penny (5 cent difference in FV value vs the spreadsheets 300 separate calculations. With 300 rounding off calculations it is difficult to get comparisons to agree to the penny.

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