An individual retirement account (IRA) collects tax-free annual contributions to help people save for when they no longer work. Each year, the contributor adds to the balance, so the account's compound rate of return acts on an increasingly large sum. You may therefore not calculate an IRA's to-date growth factor using direct algebra. But a financial calculator can determine the growth rate that brought your IRA to its current value.
1. Enter your annual contribution into the financial calculator. For example, if you have contributed $2,000 each year to the IRA, enter "2000."
2. Press the "PMT" key.
3. Enter the number of years for which you have contributed to the IRA. For example, if you have held the IRA for 10 years, type "10."
4. Press the "n" key.
5. Type "0," which was the original value of the IRA before you deposited any money.
6. Press the "PV" button.
7. Enter the account's balance at the start of the year. For example, if the account had accumulated $30,000, type "30000."
8. Press the "FV" button.
9. Press the calculator's "Compute" button.
10. Press the "i" button. With this example, the calculator will display "8.73" percent. This is the IRA's to-date growth rate.
Items you will need
- Financial calculator
- Photodisc/Photodisc/Getty Images