Methodology

The model, step by step

The simulation moves month by month rather than jumping year to year. The share price starts at an arbitrary $100. The starting price cancels out of every result; it only gives shares a unit. The share price appreciates at your price growth rate, compounded monthly.

The dividend per share is set by your starting yield against that $100 price and grows once per year at your dividend growth rate, the way real companies raise payouts annually rather than continuously. Dividends arrive at the frequency you choose, are taxed at your dividend tax rate, and the after-tax amount is split between reinvestment and take-home income according to the reinvestment slider. Reinvested dollars buy shares at that month's price.

Monthly contributions are invested as they arrive and step up once a year by your contribution growth rate. Figures labeled today's dollars are deflated by your inflation rate, and the crossover year is measured against your income goal in those deflated terms, so inflation cannot flatter it.

What the model deliberately ignores

• Volatility. Every rate in the model is smooth and constant. Real markets deliver their averages through drawdowns and recoveries, and a portfolio that ends in the same place can feel very different to hold along the way.
• Dividend cuts. Payouts fell hard in 2008 and again in 2020, and cuts cluster in recessions, precisely when share prices are already down. A constant-growth model smooths right over the scenario that hurts most.
• Sequence risk. Because there is no volatility, the order of returns does not exist here. If you are withdrawing income rather than reinvesting, that order matters a great deal in real life.
• Tax detail. Tax is one flat rate applied to every payout. Real dividend taxation depends on qualified versus ordinary status, your bracket, your account type, and your country. The flat rate is a deliberate simplification you should set to your own effective rate.
• Fees and yield traps. Expense ratios, NAV erosion in covered-call funds, and payouts that are partly return of capital are not modeled. A yield the fund cannot sustain will not behave like the smooth line on the chart.

How to use it

Treat the calculator as a scenario explorer, not a forecast. Run the pessimistic case with lower growth and a realistic tax rate next to the optimistic one. Include inflation, and pay attention to the after-tax, today's-dollar figures rather than the headline portfolio value. An assumption that survives a bad decade beats an impressive spreadsheet.

Where the numbers in the prose come from

Nothing on this site pulls live market data. Where a page quotes a fund yield or a historical figure, it was checked by hand when written. That is why the prose says "when I last checked" instead of pretending to a live feed. If you find a figure that has drifted, email contact@finaldynamics.com and it will be fixed.