Anticipated Balance

AAA

DEFINITION of 'Anticipated Balance'

The amount that a savings account will have at some future date, or that a time deposit will have at maturity, assuming no withdrawals or additional deposits occur. In broad terms, anticipated balance means the net balance in any account at a future point in time. Calculation of the anticipated balance assumes compound interest, rather than simple interest.

BREAKING DOWN 'Anticipated Balance'

Anticipated balances are important in the context of financial planning. For example, consider a couple that wants to save $20,000 over the next four years as the down payment for a house.

They currently have $10,000 in savings, and to achieve their dream of becoming homeowners, would like to know approximately how much they should save per year in a time deposit, in order to reach their target of an anticipated balance of $20,000 in four years. Assuming a compound interest rate on deposits of 3% per annum, they would need to save $2,390 per year.

RELATED TERMS
  1. Compound Interest

    Interest calculated on the initial principal and also on the ...
  2. Savings Account

    A deposit account held at a bank or other financial institution ...
  3. Time Deposit

    A savings account or certificate of deposit (CD) held for a fixed-term, ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  5. Future Value - FV

    The value of an asset or cash at a specified date in the future ...
  6. Linked Transfer Account

    Accounts held by an individual at a financial institution that ...
Related Articles
  1. Bonds & Fixed Income

    Accelerating Returns With Continuous Compounding

    Investopedia explains the natural log and exponential functions used to calculate this value.
  2. Mutual Funds & ETFs

    Money Market Mutual Funds: A Better Savings Account

    An good alternative to the traditional savings account is the money market mutual fund. It's easy, safe and has better returns.
  3. Options & Futures

    Demystification Of Bank Accounts

    Find out which type of account suits your specific needs.
  4. Technical Indicators

    Key Financial Ratios to Analyze Retail Banks

    Learn about key financial metrics that investors use to evaluate retail banks, and how the industry is fundamentally different from most other industries.
  5. Retirement

    What Are the Risks to Your Retirement Security?

    One of the biggest risks to your retirement security is something you may take for granted: your health, and more specifically, health-care costs.
  6. Insurance

    How to Shop for Home Insurance

    Tips for getting the best protection for your place and possessions.
  7. Personal Finance

    Sending Money: MoneyGram vs. Western Union

    Comparing the differences between the services – and the fees.
  8. Economics

    What's an Irrevocable Letter of Credit?

    An irrevocable letter of credit (ILOC) is a financing vehicle used to facilitate commerce between two parties who are not familiar with one another.
  9. Retirement

    Why Millennials Should Invest in a Roth IRA

    Saving for retirement is important, and it's important to start early. A Roth IRA is a great option for low-earners just entering the workforce.
  10. Home & Auto

    Are Home Inspections Worth It? - Price vs. Value

    If you’re wondering whether home inspection is worth the investment, the following information will help you decide.
RELATED FAQS
  1. Are certificates of deposit a kind of bond?

    There is a fair amount of overlap between certificates of deposit (CDs) and bonds; they are both fixed-income securities, ... Read Full Answer >>
  2. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  3. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  4. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  5. What net interest margin is typical for a bank?

    In the United States, the average net interest margin for banks was 3.03% in the first quarter of 2015. However, this was ... Read Full Answer >>
  6. What are the main benchmarks that track the banking sector?

    The appropriate benchmarks for tracking banking sector performance depend on the type of banking. For instance, commercial-only ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!