**TEENS AND THEIR MONEY**

Learn How Much Money You Can Grow

Use our Savings Calculators, to help you figure out how much money you might be able to accumulate in your life. Below is some guidance that can help you figure out what numbers to plug into various boxes.

The best thing about this calculator is that it's easy to tweak. Plug in your numbers, see the results, and then go back and *change* some numbers. See what happens if you invest a little more or less money each month. See what happens if you expect to earn a little more or less, percentage-wise, each year. Tweak, tweak, tweak!

### Amount You Have Invested $

In this box, you fill in how much money you have saved up and invested. If you're new to investing, as most people are, you might have zero invested. Just plug in 0 or however much you have socked away.

### Rate You Can Earn %

This is a very important number. It reflects how quickly you think your money will grow per year, on average. Remember that over the past many decades, the stock market has averaged about an 11% return per year. But over shorter periods, like 10 years or even 20 years, it can return an annual average of 7% or 15% or something else.

If your money won't be invested in the stock market, it will probably earn less per year. Here's a summary of how various investments have performed on average each year, between 1926 and 2001, as well as how inflation grew (again, remember that over other periods, the numbers will likely be a little different):

- Stock market: 10.2%
- Long-term government bonds: 5.3%
- Short-term government bonds: 3.9%
- Inflation: 3.1%

*(Source:* Stocks for the Long Run*, Jeremy Siegel, 2002)*

So plug in a number and see what happens. If you want to be a little conservative, then perhaps assume a growth rate of 7%, 8%, or 9%. If you want to be aggressive and think you'll be picking individual stocks that perform terrifically, then perhaps assume a growth rate of 12% to 15%.

### Additional Deposits $

This box is more important than the first one, especially for teens. Here you input how much you expect to invest over the years to come. You might expect to invest $500 per year, for example, or maybe $300 each quarter or $100 per month -- it all depends on what you think is reasonable.

Note that in five or 10 years, you'll probably be able to invest a lot more money each year, once you're out of school and working. You might want to run this calculator assuming small investments for five or 10 years, and then run it again with larger investments for 20 to 30 years. For example:

- Assume you're 16 years old.
- Invest $150 per quarter for eight years. (This takes you to age 24.)
- Invest $3,000 per year for 30 years (This takes you to age 54.)
- Add the results together and you'll see how much you might have by age 54.

### Years Invested

Here you enter how many years you will be leaving your money to grow. If you're 15, and you'll leave it until retirement at 65, you can enter 50. (Wow!) But perhaps you'd like to see how much you'd have by age 35. If so, enter 20.

### Your Federal Tax Rate %

This is hard to estimate, since tax rates tend to change a bit over the years. For now, you might assume a tax rate of 25%. That's a common rate for many not-too-rich people today.

### Your State Tax Rate %

This will also vary widely. Some states have high tax rates and others don't. It can vary between about 0% and 10%. Here's a site that offers some tax rates for each state -- see what your state charges. Note, though, that this rate can also change over the years, and that you may well end up living in some other state(s) for much of your life.

### Inflation Rate %

Inflation has averaged about 3% over many decades -- although there are sometimes decades when it's very high and other decades when it's very low. It's reasonable to leave this at 3%, but if you want to look at a more conservative worse-case scenario, you might plug in 4% or more.

That's it! If you haven't already, once you've entered your numbers, just click "Results"!

This article was adapted from *The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of.* For many more ideas and guidance on how to make and save money, check out the book. It also includes a lot of tips on how to land jobs and succeed at them.

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