Beach House Fund Mile Stone Check-In-1: How much do I need to invest to hit $100K in 5 Years? Checking in with what the math says.
We need to check in periodically to make sure we are on the right path
Introduction
As many of you know I am saving up for a beach house!! Exciting right? My goal which I outlined in my Saving For My New Beach House Fund Post is to have $100K invested by the end of 2028 or 5 years from starting my fund.
Now will $100K buy me a beach house? Probably not. But will $100K be enough for a down payment on a sweet beach house? Well, yes it likely will be!
Regardless of if $100K is enough for a beach house or not it’s at the very least a good stepping stone to that goal, just like it’s likely a good stepping stone to a lot of goals you may have regardless of if you want a beach house like me or something else that’s important to you.
I’ll be deep diving the costs of a beach house purchase and upkeep in a future post but first we need to make sure we get to our $100K goal.
Current progress
Just like with any goal we need to check in periodically to see if we are on track to hit our goals and if course correction’s are needed so we can make them early to stay on track.
To date I’ve contributed $2,934.23 to the beach fund so fat and with investment gains I’m up to $3,225.76 total as of the March 2024 update.
Seems like a pretty good start right? But how do we know if this is enough to reach our goal of $100K by the end of 2028. Are we investing enough to reach our goal?
To answer these questions I did some math. I even created a web calculator so we can easily check in on my progress over time!
What The Math Says
I really like this question because it starts with the end in mind, instead of saying I can invest $X per month how long will it take. You flip the narrative and say I want to be at $Y in a specified period of time how much do I need to contribute?
Well I built a little calculator to find out!!
Monthly Contribution Tool
So my calculator I built in excel says it’ll take a monthly contribution of $1,384.48 to reach this goal given an 8% return and starting with my current beach fund balance.
And just to check my math I plugged this into my Future Value Portfolio tool and came up with December 30th 2028 or 1 day early!!
Portfolio progress with a monthly contribution of $1,384.48
Keep in mind these calculations are based on an 8% assumed market return. We don’t really know what the markets will do but this gives us a general idea of what we need to contribute to hit our goal of $100K in 5 years.
So How Are We Doing?
So with this information in hand we can evaluate how our current trajectory. Looking at my past 7 months of contributions (including my starting balance) we can see I’ve averaged a monthly contribution of $419.17 per month.
Which is ($1,384.48 – $419.17 = $967.31) $965.31 short of what we need to be saving…. YIKES!
Lets pretend I’m one to leave things to chance and I changed nothing about my contribution amount. How long would it take to reach our $100K goal at this rate?
Our calculator says it’ll take over 11 YEARS! (July 28, 2035).
What if we changed nothing?
We Need To Up Our Game!
So we clearly need to up our game to have a chance to hit this 5 year goal! The good news is it’s only April 2024 I have 4 years and 8 months left to hit this goal, so I have time to make early adjustments to correct course.
I talk about in my Formula For Success Post how we should break down bigger goals into smaller milestones so we can incrementally track progress to make sure we are staying on track.
So with this in mind I ran the numbers to find out where I should be at the end of 2024 to be on track for our 5 year goal of investing $100K
calculating End of 2024 Portfolio Balance needs to be $15,984.50
The math says we should be at about $15,984.50 at the end of 2024 to be on track. So I’m updating my 2024 goal to reflect this. I think this will be a challenging goal for me but doable if I dedicate myself to making buying a future beach house a priority!
By making some small changes now we can overcome this shortfall vs ignoring the math and having a bigger problem later!
Make sure to subscribe to keep track of my progress with our free News Letter where I provide monthly updates regardless if it’s good news or more humbling posts such as this one where I need to step up my game!
New Calculators!
This was a good exercise for me to do and I should have done this from the beginning, but when I started the Beach House Fund I was mainly focused on getting started which is a step many never take.
Now that it’s up and running I needed to check in and refine the plan. And what better way to do that than some fancy new calculator tools!
Investing for a long-term goal is an iterative process and you’ll need to adjust course from time to time. Having some easy to use calculator tools can be a great way to quickly check in. below are the 2 tools I made for this check in.
I built 2 new calculators and updated them to my centralized Web Calculators Hub were all of my calculators are always 100% FREE.
But for quick reference I’m also including the two I used in this article below so you can use them for your own goals.
Note: I am not a financial planner, I am providing these calculator tools as general educational tools. Calculators are only as good as the assumptions you put in.
Monthly Contribution Calculator:
Calculates how much you need to contribute monthly to reach a specific investment goal by a specific date, given starting amount, and specific rate of return. This is a classic “Start with the end in mind” approach where you set your goal then figure out what you need to do to reach it by a specific time. I find this type of approach to be very useful.
Contribution Calculator
Result
| Required Monthly Contribution |
How Long Will It Take Calculator
Calculates how long it will take to reach a given investment goal with a specific starting amount, goal amount, monthly contribution, and rate of return.
How Long Will It Take?
Result
| Durration (Months) | |
| Durration (Years) | |
| Date Goal Is Reached |
Portfolio Value Over Time
I hope you enjoyed this post and find the calculator tools I’ve built useful. It was a little bit of a humbling experience for me to run the numbers and realize how short I have come to reach my investing target, but I’d rather know this now than 5 years from now when I haven’t reached my goals.
Small adjustments today can make big changes down the road, Including a new and improved Retirement Date calculator, and a more advanced Monte Carlo simulator for with multiple asset categories. so make sure to Subscribe to get notified of future updates!
