HOW WE CALCULATED THESE LIFETIME EARNINGS
To project the salary of a 30-year old woman currently earning $85,000, we used a women-specific salary curve from Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc., which includes the impact of inflation. We added up her projected salary each year over her 40-year career.
HOW WE CALCULATED THIS INCREASED EARNINGS WITH A RAISE
We projected the salary of a 30-year old woman currently earning $85,000 and one earning $110,500 (assuming a 30% raise) using a women-specific salary curve from Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc. We sum up both projected salaries over 40 years, in today’s dollars, and calculate the difference.
HOW WE CALCULATED THIS RETURN BY SAVING IN THE BANK
The banking account results assume a 1% long-term average annual cash return over 40 years.
HOW WE CALCULATED THIS INVESTMENT PROJECTION
The low end of the range assumes that you invest 20% of your salary ($85,000 currently) with a financial advisor in a diversified mutual fund portfolio comprised of 60% equity and 40% bonds, which is rebalanced to this allocation each year. Fees include average mutual fund fees and an assumed advisory management fee of 1%. The high end of the range assumes that 20% of your salary is invested with Baobab Wealth in a diversified low-cost ETF portfolio comprised of 91% equity to start and growing more conservative towards the end of the investment horizon (40 years). Fees include those for the recommended ETFs and Baobab Wealth’s fee of 0.50%.
We assume salary growth based upon a women-specific salary curve provided by Morningstar Investment Management LLC, and that you save 20% of your salary each year. These results are determined using a Monte Carlo simulation—a forward-looking, computer-based calculation in which we run portfolios and savings rates through hundreds of different economic scenarios to determine a range of possible outcomes. The results for the low end of the range reflects a 70% likelihood of achieving the amount shown or better, and the high end of the range reflects a 50% likelihood of achieving the amounts shown or better. All results include the impact of inflation, and estimated taxes paid on dividends, interest, and realized capital gains.
The results presented are hypothetical, and do not reflect actual investment results, the performance of any Baobab Wealth product, or any account of any Baobab Wealth client, which may vary materially from the results portrayed for various reasons.
