The Money PagesCan a Chart Tell the Future?
A smooth growth example follows made-up rules. Real results can change.
Imagine a chart that shows money growing by the same amount or rate each year. Can it tell the future?
No. Someone chose rules to make that chart. Those rules are called assumptions.
A projection is a guess about a future result based on those rules. Change the rules, and the result changes.
Real rates and costs can change. People may take money out. An investment is something you buy, hoping it will grow in value. It can lose value instead. More years don't promise a bigger balance.
A made-up chart can explain an idea. Before trusting its result, ask: “What rules did they use? What could change?”
Money words
Projection
A guess about a future result, based on chosen rules.
A future-money example follows chosen rules. Real life can change, so its result is not a promise.
