Start with capital, contributions and a goal
The simulation uses your monthly after-tax goal, annual yield, tax rate, taxable portion, starting capital and monthly contribution. It checks whether the opening investment already supports the goal. If so, the result is zero months.
Monthly income capacity is investment balance multiplied by annual after-tax yield and divided by twelve. At a 5% gross yield, 15.4% assumed tax and a 100% taxable portion, the annual net yield is 4.23%.
The order of one simulated month
First, estimate dividends from the opening balance. Next, add those dividends at month end if reinvestment is enabled, then add the monthly contribution. Finally, compare the new balance’s monthly income capacity with the goal.
For a hypothetical USD 10,000 opening balance at 4.23% net yield, the first monthly dividend is USD 35.25. With USD 500 contributed and reinvestment enabled, the closing balance is USD 10,535.25. If reinvestment is disabled, the dividend is treated as cash received rather than added to the investment balance.
Know what stays constant
Price growth and distribution growth are both fixed at zero. Fractional investment is assumed; fees, inflation and exchange-rate movements are excluded. Total contributions are starting capital plus deposits, without counting reinvested dividends as fresh money you contributed.
The model spreads annual income evenly across months. It therefore differs from a real ETF payment schedule. A real monthly, quarterly or irregular payment pattern could change the timing of reinvestment.
Unreachable and very distant goals
A positive goal cannot be reached with zero after-tax yield. A balance below the goal also cannot grow if there are no contributions and reinvestment cannot increase it. The calculator identifies these conditions separately.
Other scenarios run for at most 1,200 months. “Not reached within 100 years” means the goal was outside that range, not that it can never be reached mathematically. Try changing the goal or contribution to compare scenarios without treating the result as a promised date.