What goes into a projection
A net worth projection starts from today’s balance sheet and rolls it forward one month at a time. Our projection calculator uses these inputs:
- Invested assets
- Balances expected to grow at the assumed return, such as retirement and brokerage accounts.
- Other assets
- Things like a home or car, held at today’s value with no growth assumed.
- Debt and payment
- The balance owed, its interest rate and the monthly payment you make.
- Monthly contribution
- What you add to investments at the end of each month.
- Return and inflation
- An assumed nominal annual return, and an inflation rate used to show the result in today’s money.
Each month: investments × (1 + return ÷ 12) + contribution; debt × (1 + debt rate ÷ 12) − payment, never below zero
A worked 30-year example
Take 100,000 invested, 250,000 of other assets, 180,000 of debt at 4% with a 1,200 monthly payment, a 500 monthly contribution, a 6% return and 2.5% inflation. These are the calculator’s default values.
| Year | Assets | Debt | Net worth | In today’s money |
|---|---|---|---|---|
| 0 | 350,000 | 180,000 | 170,000 | 170,000 |
| 5 | 419,770 | 140,221 | 279,549 | 247,081 |
| 10 | 513,879 | 91,650 | 422,229 | 329,845 |
| 15 | 640,819 | 32,346 | 608,473 | 420,130 |
| 20 | 812,041 | 0 | 812,041 | 495,565 |
| 30 | 1,354,515 | 0 | 1,354,515 | 645,755 |
The debt is paid off in month 209, which is 17 years and 5 months in, so the calculator’s year-by-year table shows it in year 18. After that the model keeps the contribution at 500 a month. It does not move the freed 1,200 payment into investments, so if you would do that, enter a higher contribution for the later period. Our pay off debt or save guide looks at that trade-off.
Which assumption matters most
Over long periods, the return assumption usually dominates. In the example, the 30-year result is 928,375 at 4%, 1,354,515 at 6% and 2,088,753 at 8%. The contribution matters most in the early years, when balances are small. Inflation does not change the nominal total but has a large effect on what it is worth: at 2.5% a year, 1,354,515 in 30 years is worth about 645,755 in today’s money. The inflation guide explains that adjustment.
| Assumed return | After 20 years | After 30 years |
|---|---|---|
| 4% | 655,646 | 928,375 |
| 6% | 812,041 | 1,354,515 |
| 8% | 1,037,190 | 2,088,753 |
Good habits for a useful projection
- Run at least three scenarios: cautious, middle and hopeful.
- Use a return after fund fees; a 1% fee lowers a 6% return to about 5%.
- Keep the home at today’s value unless you have a reason to assume growth.
- Look at the inflation-adjusted column before deciding whether a figure is “enough”.
- Update the starting values once a year and compare with what actually happened.
What the model leaves out
Real returns arrive unevenly, with losing years mixed into good ones. The model applies one steady rate, which is useful for comparing plans but hides the risk of a bad sequence. It also excludes taxes, fees you do not enter, job changes and large one-off costs. Treat every figure as an illustration of your assumptions.
Questions people ask
What return should I assume?
There is no correct figure. Test a range rather than relying on one number, and remember that past returns do not guarantee future ones.
Why does the model compound monthly?
It matches how contributions and loan payments usually happen. The difference from annual compounding is explained in monthly vs annual compounding.
Sources
- Investor.gov (U.S. SEC), Compound interest.
- Investor.gov (U.S. SEC), Expense ratio: how fund costs reduce returns.
- U.S. Bureau of Labor Statistics, CPI inflation calculator.
Educational illustration only. Projections are not predictions or personal financial advice.