Sample Scenario 11 is very similar to Sample Scenario 9 except we are investing in certificates of deposit (CDs) instead of a savings account.
We've also assumed that the rate of return on CDs are slightly better than the interest rate you'd earn investing your money in a savings account.
In this Scenario we assumed that you are able to earn 2.25% per year investing $100K in CDs.
Again, simple and easy.
This Scenario was made so I could create the How to Invest $100K article where I compare investing $100K in a variety of different investments. This Scenario investing in CDs is on the more simple ones.
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SS 009 Investing $100,000 in Savings at 2%/yr with 2 Accounts, 0 Properties, 0 Rules, 1 Goal
Once you have it copied to your own Planner™, you can add additional complexity to it. I think of many of these simple Scenarios as blank canvases that you can start with and then add on to as you build and model your own personal situations.
Since your entire Net Worth in this Scenario consists of your investment in CDs, I am going to show you how an initial investment of $100K in CDs grows over time when earning 2.25% per year.
There are a number of other Charts available for this (and all the other) Scenarios. However, since this Scenario is so simple, there really aren't a lot of interesting ones available for this Scenario.
Things For You To Test For Yourself
Once you copy this Scenario to your own Planner™ you may want to add/edit it to see the following:
- See how changing the Inflation Rate on the Scenario edit page impacts your inflation-adjusted Net Worth.
- Add a Paycheck and Personal Expenses rule to model your earning power, your expenses and your monthly savings. You can also use this same Rule to model things like social security that starts at some date in the future.
- See how changing the 2% Yearly Rate of Return on the $100,000 Invested in Savings at 2%/year account edit page impacts your Net Worth.
- Add a Rule to make the 2.25% Yearly Rate of Return on the $100,000 Invested in CDs at 2.25%/year account vary instead of having it be fixed. If you're going to make the Yearly Rate of Return variable, you may want to run the Scenario multiple times to see the range of results or do a full Monte Carlo analysis and have the Real Estate Financial Planner™ software run the Scenario multiple times for you and summarize the results on one Chart.
- Add in Properties (which can be single family homes, duplexes, triplexes, fourplexes, apartments, commercial/industrial/retail buildings, and more).
- Set Goals like for a certain dollar Net Worth or when your safe withdrawal rate from your stock market account can cover your Target Monthly Income in Retirement and you've hit you're user-defined financial independence number.
- Plus, much more…
Here are some of the other sample Scenarios that only have CDs in case you want to look for other ones that are similar to this one.
More posts: Scenario With Only CDs
Scenarios with Fixed Rate of Return on CDs
Looking for other sample Scenarios that have fixed rates of return on CDs? If so, check these out:
More posts: Scenario with Fixed CDs Rate of Return