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Present Value Calculator
Often we see future superannuation payout amounts and think they are huge amounts. What we tend to forget
is between now and when the money is received, the future value of that money is eroded by inflation.
A better approach is to look at the future amount in today's terms. You'll be very surprised to learn
that a very large superannuation payout you'll retire on in 30 years time, will be worth a fraction of
what you think it is worth. The Present Value Calculator enables you to take a future amount and determine
how much it is worth in today's terms and thus what you would be able to buy.
Future Value - Enter the amount of money you'll receive at some future date. Don't include the dollar
sign, commas, the decimal point or cents. Use whole dollars only.
Years - Enter the number of years to when you'll receive the money.
Interest Rate - You'll need to decide on what you feel is a reasonable interest rate for inflation.
The cost of goods and services increases each year so a dollar earned this year can't buy quite as much
as a dollar earned last year. Inflation varies year to year and even varies across the country. The government
reportedly aims for an inflation rate of 2-3%, but do remember inflation in good times does increase and in the mid 70s it reached around a staggering 17%.
I'd suggest a good figure would be 4-5%. Based on the RBA data between September 1970 and March 2013 the average CPI has been 5.8%.
I hope you find the calculator useful and informative.
Disclaimer
This calculator comes with no warranty expressed or implied.
The calculator is only for informational
purposes and is not guaranteed to be error free.
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