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Saving and investing

Where a dollar goes first, what a term deposit really returns after tax, and how the standard measures are worked out.

58 situations worked through, 50 of them with the sums shown. Each one links to the guide that sets out the rules behind it, and that guide is where any rate or threshold is kept current.

The people in these situations are illustrations written to show how the rules land on somebody, not real customers and not case histories. The arithmetic is real and the rules are real; the names and the circumstances are made up to teach.

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Bonus Saver Accounts

Aroha vs Ben: One Withdrawal, One Month

Aroha and Ben each hold $10,000 in the same bonus saver. It pays a 1.00% base rate and a 4.00% total rate when the conditions are met. Both leave their money in place, but Ben makes one withdrawal this month.

  1. Monthly interest at the full rate: $10,000 × 4.00% ÷ 12

= $33.33 for the month

The same calculation on its own, with others like it

Base vs Bonus on a $5,000 Balance for a Year

Priya keeps $5,000 in a bonus saver for a full year. The base rate is 1.00% and the full rate is 4.00%. Her income puts her on the 17.5% RWT rate. What is the difference between never earning the bonus and always earning it?

  1. Gross interest: $5,000 × 1.00% = $50.00
  2. RWT at 17.5%: $50.00 × 0.175 = $8.75

Net interest: $41.25 for the year

💡 The Bonus Is the Whole Point

The bonus is worth $123.75 net over the year on just $5,000 ($165.00 minus $41.25). The base rate on its own barely beats leaving the money in a transaction account. On a bonus saver, the bonus is not a nice extra, it is almost the entire return.

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The Effective Rate Most People Actually Get

Sam holds about $8,000 in a bonus saver advertised at "up to 4.50%", with a 1.00% base rate. Life happens: Sam meets the conditions for 8 months of the year and makes a withdrawal in the other 4 months, dropping to the base rate those months.

  1. Each month: $8,000 × 4.50% ÷ 12 = $30.00
  2. Over 8 months: $30.00 × 8 = $240.00
⚠️ Compare the Rate You Will Really Earn

Sam's advertised rate was 4.50%, but four slip-ups pulled the real return down to 3.33%. Before choosing a bonus saver, be honest about how many months you would break the conditions, and compare that effective rate, not the headline, against a simpler account.

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Bonus Saver vs Term Deposit on $20,000

Mere has $20,000 she will not need for a year. She compares a bonus saver at a 4.00% full rate (kept every month) with a 12-month term deposit fixed at 4.50%. She is on the 30% RWT rate.

  1. Gross interest: $20,000 × 4.00% = $800.00
  2. RWT at 30%: $800.00 × 0.30 = $240.00

Net interest: $560.00, money stays accessible

💡 The Trade-Off Is Access vs Return

The term deposit pays $70 more net over the year ($630 against $560), because Mere gives up access to her money for the full term. Break a term deposit early and the bank usually pays a reduced rate, wiping out much of that advantage. The bonus saver pays a little less but stays reachable, as long as Mere keeps the conditions. Which wins depends on how certain she is that she will not need the cash.

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CAGR Explained

Sarah's Share Portfolio (7 Years)

Sarah invested in New Zealand shares starting with $40,000 in 2018. It's now 2025 and her portfolio is worth $68,500.

  1. Beginning Value (2018): $40,000
  2. Ending Value (2025): $68,500
  3. Time Period: 7 years
  4. CAGR = ($68,500 ÷ $40,000)^(1÷7) - 1
  5. = 1.7125 ^ 0.1429 - 1
  6. = 1.0789 - 1

= 7.89% CAGR

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Tech Startup Revenue Growth

A SaaS (software) company tracks revenue growth from launch to assess performance.

  1. Year 1 (2021): $150,000
  2. Year 2 (2022): $320,000
  3. Year 3 (2023): $580,000
  4. Year 4 (2024): $950,000
  5. Year 5 (2025): $1,400,000
💡 Startup Reality

The 74.4% CAGR is exceptional but typical for successful early-stage tech companies. Notice how the year-over-year growth is slowing (113% → 47%) as the revenue base gets larger. This is called the "law of large numbers" - it's harder to double $1M than $150K.

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Property Investment Comparison

Comparing returns from two different property investments purchased at different times.

  1. Purchased 2015: $650,000
  2. Current Value 2025: $1,050,000
  3. Time: 10 years
  4. CAGR = ($1,050,000 ÷ $650,000)^(1÷10) - 1

= 4.93% CAGR

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KiwiSaver Fund Performance

Comparing three different KiwiSaver funds over the same 8-year period.

  1. ($72,500 ÷ $50,000)^(1÷8) - 1 = 4.79% CAGR
⚠️ Risk vs Return

The Growth fund's higher CAGR came with more volatility. During the 2020 COVID crash, it likely fell 20-30% while Conservative only fell 5-10%. Higher returns require tolerance for bigger swings!

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Depositor Compensation Scheme

Aroha - $80,000 at one bank, fully covered

Aroha keeps $80,000 in a savings account at her main bank and has no other accounts there. She wants to know whether her money is protected.

  1. Total at this deposit taker: $80,000
  2. DCS cap: $100,000 per person, per institution
  3. $80,000 is below the $100,000 cap

Protected: $80,000. Above the cap: $0

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Tama - $180,000 spread across two banks

Tama has sold a car and some shares and is holding $180,000 in cash while he decides what to do. He wants it all protected.

  1. Total at Bank X: $180,000
  2. Cap applied: $100,000

Protected: $100,000. Above the cap: $80,000

💡 The difference

By splitting the same $180,000 across two licensed deposit takers, Tama moves from having $80,000 exposed to having the full amount protected. Each institution provides a separate $100,000 limit.

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Mere and Hone - a joint term deposit

Mere and Hone hold a $160,000 joint term deposit at one bank and have no other accounts there. They want to know how the cap treats a joint account.

  1. Joint balance: $160,000
  2. Each holder is a separate depositor
  3. Mere's share: $160,000 / 2 = $80,000
  4. Hone's share: $160,000 / 2 = $80,000
  5. Each share is below the $100,000 cap

Protected: $80,000 + $80,000 = $160,000. Above the cap: $0

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Ravi - a term deposit plus an everyday account

Ravi has a $95,000 one-year term deposit and $12,000 in an everyday transaction account, both at the same bank. He assumed each account had its own $100,000 limit.

  1. Term deposit: $95,000
  2. Transaction account: $12,000
  3. Combined at one deposit taker: $95,000 + $12,000 = $107,000
  4. Cap applied to the combined total: $100,000

Protected: $100,000. Above the cap: $7,000

⚠️ Accounts are combined first

Ravi's two accounts are added together before the cap is applied, so $7,000 is above the limit. To protect all of it he could move at least $7,000 to a second licensed deposit taker, which would bring his combined balance at the first bank down to $100,000 or less and cover the rest under a fresh $100,000 limit at the second.

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Employee Share Schemes Tax

Priya - RSUs Vesting on Top of Salary

Priya earns a salary of $95,000 (tax code M). Her employer granted her RSUs, and 400 of them vest on the taxing date when the market price is $25.00 per share. She paid nothing for them.

  1. Step 1: value the benefit
  2. 400 shares × $25.00 = $10,000 market value
  3. Less amount paid: $0
  4. ESS benefit: $10,000
  5. Step 2: find the marginal rate
  6. Salary $95,000 is in the 33% band ($78,101 to $180,000)
  7. Benefit $10,000 stacks on top: $95,000 to $105,000, still under $180,000
  8. So all $10,000 is taxed at 33%
  9. Step 3: the tax

$10,000 × 33% = $3,300 of income tax

💡 No Tax Was Withheld

Priya's employer reported the $10,000 through payday filing but deducted no tax on the shares. So Priya should set aside the $3,300 (or sell about 132 shares at $25 to raise it) ready for her year-end assessment. No KiwiSaver or ACC comes off the benefit.

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Tane - A Discounted Share Purchase

Tane earns $70,000. Through his employer's purchase plan he buys 1,000 shares at a 15% discount. The market value on the taxing date is $8.00 per share, and he pays $6.80 per share.

  1. Step 1: what he paid
  2. $8.00 × (1 − 0.15) = $6.80 per share
  3. 1,000 × $6.80 = $6,800 paid
  4. Step 2: the benefit (the discount)
  5. Market value: 1,000 × $8.00 = $8,000
  6. Benefit: $8,000 − $6,800 = $1,200
  7. Step 3: the tax
  8. Income $70,000 is in the 30% band; $70,000 + $1,200 = $71,200, still under $78,100

$1,200 × 30% = $360 of income tax

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Mere - The Taxing Date Defers the Tax

Mere is granted 500 shares in 2026, but they carry a real risk of forfeiture: she must stay three years, and the shares are restricted until then. The taxing date is therefore deferred until the restrictions lift in 2029.

  1. If the value were fixed at grant (2026)
  2. Price then $10.00: 500 × $10.00 = $5,000 (but this is NOT the benefit)
  3. The benefit is measured on the taxing date (2029)
  4. Price then $18.00: 500 × $18.00 = $9,000 market value
  5. Less amount paid: $0

ESS benefit: $9,000, taxed in the year the restrictions lift

💡 Rising Prices Cut Both Ways

Deferral meant Mere was taxed on $9,000 rather than $5,000, because the price rose. Had the price fallen, her taxable benefit would have been lower. Either way, the value is locked in at the taxing date, and any move after that is an ordinary investment gain or loss.

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Sam - Budgeting for the Year-End Bill

Sam earns $85,000 (the 33% band). During the 2026/27 year, RSUs worth $10,000 vest and a purchase-plan discount adds another $2,000 of benefit. No tax was deducted on either.

  1. Total ESS benefit for the year
  2. RSUs: $10,000
  3. Discount: $2,000
  4. Total: $12,000
  5. Tax at the marginal rate
  6. Salary $85,000 + $12,000 = $97,000, all within the 33% band
  7. $12,000 × 33% = $3,960

Set aside about $3,960 for the year-end bill

⚠️ The $5,000 Provisional Tax Trigger

Sam's residual tax to pay is $3,960, under the $5,000 threshold, so provisional tax is unlikely this time. But in a bigger vesting year the tax to pay can top $5,000, which can push you into provisional tax for the next year. A simple rule keeps you safe: each time shares vest or you buy at a discount, reserve your marginal rate on the benefit straight away, or sell enough shares to cover it.

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Future Value of Annuity Guide

Young Professional's KiwiSaver Journey

Meet Sarah, 25, starting her career.

  1. Salary: $60,000
  2. Employee contribution: 3.5% = $2,100/year ($175/month)
  3. Employer match: 3.5% = $2,100/year ($175/month)
  4. Government contribution: $260.72/year ($21.73/month)
  5. Total monthly: $372
  6. Expected return: 6% annually
  7. Years until retirement (65): 40 years

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Starting Early vs Starting Late

Emma vs James: The Cost of Waiting

  1. Monthly contribution: $300
  2. Years of contributing: 40 (age 25 to 65)
  3. Return: 7% annually
  4. Total contributed: $300 × 12 × 40 = $144,000
  5. Future value at 65: $719,147
⚠️ The 10-Year Delay Cost

James contributed $36,000 LESS than Emma but ended up with $379,000 LESS at retirement. Waiting 10 years cost him more than 10x what he would have contributed! Time is more valuable than money when it comes to compound interest.

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House Deposit Savings Plan

Mike and Lisa want $150,000 for a house deposit in 7 years.

  1. Current savings: $15,000
  2. Target: $150,000
  3. Gap to fill: $135,000
  4. Timeframe: 7 years
  5. Expected return: 3.5% (conservative savings account)

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Children's Education Fund

Planning for twin daughters' university costs.

  1. University per child: $60,000
  2. Two children: $120,000 total needed
  3. Current ages: newborns
  4. Time to save: 18 years

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Investing for Your Kids: Accounts, Funds, Tax

Noah, $20 a week from birth to 18

Noah's parents put $20 a week into a diversified fund for him from birth. That is $20 × 52 = $1,040 a year. Assume the fund returns 5% a year after fees and tax, and that each year's contributions are invested at the end of the year.

  1. Future value factor: ((1.05 to the power of 18) − 1) ÷ 0.05 = 28.132
  2. Balance at 18: $1,040 × 28.132 = $29,257
  3. Total contributed: $1,040 × 18 = $18,720

Balance about $29,250, of which about $10,530 is growth on top of what the family put in.

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Mia, 16, in KiwiSaver with a part-time job

Mia is 16, a KiwiSaver member, and earns $12,000 a year in a part-time job. She contributes at the default 3.5% rate. Because she is 16, she now qualifies for both the government and employer contributions.

  1. Her own contribution: $12,000 × 3.5% = $420
  2. Employer contribution (3.5% from 1 April 2026): $12,000 × 3.5% = $420, before employer superannuation contribution tax (ESCT) is deducted
  3. Government contribution: 25 cents per $1, so $420 × 25% = $105 (her $420 is below the $1,042.86 needed for the full $260.72)

About $945 added in the year, of which roughly $525 is employer and government money on top of her own $420.

💡 Topping up to grab the full match

If Mia's whanau topped up her own contributions from $420 to $1,042.86 during the year, her government contribution would rise from $105 to the full $260.72. A younger sibling under 16 would get neither the government nor the employer contribution, though they can still join and let their contributions compound.

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The Patel family, a PIE fund at a child's 10.5% PIR

The Patels invest $10,000 for their daughter in a PIE managed fund, held in her name with her IRD number recorded. In one year the fund attributes $500 of taxable income to her. She has no other income, so her PIR is 10.5%.

  1. $500 × 10.5% = $52.50

The child keeps $500 − $52.50 = $447.50

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Ava, the IRD number that unlocks the low rate

Ava's grandparents open a PIE fund for her but do not supply her IRD number. The same $500 of PIE income arises in the year as in the Patel example. Without an IRD number and PIR, the fund must use the default 28%.

  1. Default PIR of 28%: $500 × 28% = $140
  2. Correct child PIR of 10.5%: $500 × 10.5% = $52.50

The missing IRD number costs $140 − $52.50 = $87.50 that year.

⚠️ Get the IRD number first

An IRD number for a child is free and can be arranged from birth. Once Ava's number and 10.5% PIR are recorded, her tax on $500 of income drops from $140 to $52.50, and she avoids the six-week account-closure deadline that applies when a PIE has no IRD number. It is the cheapest $87.50 a year you will ever save.

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IRR Guide

Restaurant Expansion Decision

Scenario: Restaurant owner considering second location.

  1. Initial investment: $400,000 (buildout, equipment, inventory)
  2. Year 1 net cash flow: $60,000
  3. Year 2: $85,000 (growing reputation)
  4. Year 3: $110,000
  5. Year 4: $125,000
  6. Year 5: $140,000
  7. Residual value Year 5: $200,000 (sell or refinance)

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Rental Property Investment

Scenario: Evaluating rental property purchase.

  1. Purchase price: $550,000
  2. Down payment (20%): $110,000
  3. Annual net rental income (after mortgage): $8,500
  4. Hold for 10 years
  5. Expected appreciation: 3% annually
  6. Selling price Year 10: $739,000
  7. Less loan balance: -$310,000
  8. Less selling costs (6%): -$44,000
  9. Net proceeds: $385,000

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Private Equity Buyout

Scenario: PE firm acquires manufacturing company.

  1. Purchase price: $50M
  2. Equity invested: $15M (30%)
  3. Debt: $35M (70%)
  4. Hold period: 5 years

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When IRR Misleads

Scenario: Comparing two mutually exclusive projects.

  1. Investment: $10,000
  2. Year 1 return: $13,000
  3. IRR = 30%
  4. NPV at 10% = $1,818
⚠️ IRR vs NPV Conflict

Alpha has higher IRR but Beta creates more value ($18,882 vs $1,818). When IRR and NPV conflict, choose NPV. You'd rather have $18,882 in value than a higher percentage on a tiny project. This shows why IRR alone isn't enough for decisions.

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The Order of Investing

Aroha - Credit Card or Invest?

Aroha has $5,000 owing on a credit card charging 22.95% a year, and she has just received a $5,000 bonus. She wonders whether to invest the bonus in an index fund she expects to average about 7%, or use it to clear the card.

  1. Interest avoided in the first year: $5,000 x 22.95% = $1,147.50
  2. This saving is guaranteed and is not taxed

Card cleared, $1,147.50 kept for certain

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Mere - Leaving the KiwiSaver Match on the Table

Mere is a self-employed graphic designer, so no KiwiSaver comes out of a pay packet. By June she has paid $500 into her KiwiSaver for the year that runs 1 July to 30 June. She has $600 spare and is about to buy an index fund with it.

  1. Government contribution earned: $500 x 25% = $125
  2. Maximum available: $260.72 (needs $1,042.86 contributed)

Still on the table: $260.72 - $125 = $135.72

💡 Free money first

Mere's $600 does far more inside KiwiSaver this year than in an index fund. Putting $542.86 in before 30 June earns a guaranteed $135.72 from the government. Only after capturing that full contribution does it make sense to invest the rest wherever she likes.

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Wiremu and Hine - Mortgage or Invest?

Wiremu and Hine have no bad debt, capture their full KiwiSaver contributions, and hold a three-month emergency fund. They have $10,000 spare and a mortgage fixed at 5.99%. Should they pay down the mortgage or invest?

  1. Guaranteed, tax-free saving: $10,000 x 5.99% = $599 in the first year
  2. The saving is certain and shortens the loan

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Sione - Emergency Fund Before Shares

Sione earns $55,000, has no bad debt, and receives his full KiwiSaver match. He has $6,000 saved and is keen to put it all into a share fund. His essential monthly costs are $2,600.

  1. Three months of essentials: $2,600 x 3 = $7,800
  2. Current savings: $6,000

Gap to fill first: $7,800 - $6,000 = $1,800

⚠ The emergency fund is not "wasted" cash

It can feel dull to hold $7,800 in a savings account earning little while shares climb. But that cash is what lets Sione stay invested through a downturn instead of being forced to sell. It is the foundation that makes long-term investing possible.

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Risk vs Return Fundamentals Guide

Young Worker - Conservative vs Growth Choice

Emma, age 25, starting career

  1. Conservative choice costs: $704,000!
  2. Over 40 years, growth fund gives 3x more money
  3. Yes, growth fund will have scary drops:
  4. • Probably 5-8 years with -10% to -25% returns
  5. • Maybe 2-3 crashes of -30%+
  6. • But 40 years is long enough to recover every time

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Family - Mortgage vs Investment Trade-off

Mike & Lisa, ages 38 & 36, two young kids

  1. Extra $1,500/month to principal
  2. Pays off mortgage in 18 years (vs 25 years)
  3. Saves $125,000 in interest
  4. Age 56: Mortgage-free
  5. KiwiSaver age 65: $348,000 (conservative, 27 years)
  6. Total wealth age 65: House ($1.2M) + KiwiSaver ($348K) = $1.55M

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Pre-Retiree - Reducing Volatility

David, age 58, planning retirement at 65

  1. Stay 100% Growth (risky near retirement):
  2. Best case: $1,020,000 age 65
  3. Average case: $850,000
  4. Crash scenario: $520,000 (if crash year 6)
  5. Glide path (reducing risk):
  6. Best case: $870,000 age 65
  7. Average case: $740,000
  8. Crash scenario: $660,000 (protected by conservative allocation)

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First-Time Investor - Where to Start

Sarah, age 30, new to investing beyond KiwiSaver

  1. Return: 5%/year
  2. 10 years: $77,641
  3. 20 years: $205,753
  4. Volatility: None
  5. Risk: Inflation (real return only 2%)

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How Savings Interest Is Calculated and Taxed in NZ

Aroha: a normal month

Aroha holds $10,000 in a savings account paying 4.5 percent, and her RWT rate is correctly set at 17.5 percent. It is a 31 day month and her balance does not move.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Sam: never chose a rate

Same balance, same account, same year. Sam has given his IRD number but never selected an RWT rate, so the bank deducts the 33 percent default. His correct rate is 17.5 percent.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Mere: no IRD number on the account

Mere opened the account years ago and never supplied her IRD number. The bank deducts 45 percent.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Tim: compounding over a year

Tim wants to know whether monthly payment beats annual payment on the same 4.5 percent.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Term PIEs vs Term Deposits

Rachel, on the top rate

Rachel earns well above $180,000, so her RWT rate is 39 percent and her PIR would be 28 percent. She has $50,000 to put away for a year at 5 percent.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Hemi, on 17.5 percent

Hemi's income puts him at 17.5 percent for both RWT and his PIR. Same $50,000, same 5 percent, same year.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Ana, and the higher advertised rate

Ana is a 39 percent taxpayer choosing between a term deposit at 5.10 percent and a term PIE at 5.00 percent, on $50,000 for a year.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Tomas, who never filled in the form

Tomas opened a savings account years ago and never gave his IRD number. His real rate would be 17.5 percent. He earns $2,500 of interest in a year.

This one turns on the rules rather than on a calculation, so there are no sums to show.

Term PIEs vs Term Deposits: After-Tax

Aroha, a 39% taxpayer, $50,000 for one year

Aroha earns over $180,000, so her marginal rate is 39%. She has $50,000 to lock away for 12 months. A term deposit and a term PIE both offer a 5.00% headline rate.

  1. $50,000 × 5.00% = $2,500 interest for the year

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Tom, a 17.5% earner, where it barely differs

Tom earns $45,000, which puts his marginal rate at 17.5%. His two-year income test also gives him a PIR of 17.5%. He has $20,000 to invest for a year, again at a 5.00% headline rate.

  1. $20,000 × 5.00% = $1,000 interest for the year
💡 The cap only helps above 28%

Tom's rate is already below the 28% PIR cap, so the cap gives him nothing. For him the two products are interchangeable on tax, and he should choose on the headline rate, the term, and whether he wants the certainty of DCS deposit protection, which favours the term deposit.

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Priya, choosing the right PIR

Priya's income has risen. Two income years ago her taxable income was $49,000; last year it was $58,000. Her PIE investments attribute about $2,000 of income to her a year. Which PIR should she give her term PIE?

  1. 10.5%? Needs taxable income of $15,600 or less in a year. Neither year qualifies.
  2. 17.5%? Needs a year with taxable income $53,500 or less and total $78,100 or less.
  3. Two years ago: $49,000 income (under $53,500) and $49,000 + $2,000 = $51,000 total (under $78,100). This year qualifies.

Priya's PIR is 17.5%, the lower rate her earlier year allows, even though her latest income sits in the 30% bracket.

⚠️ Review your PIR each year

Priya's low rate will not last forever. Once neither of her last two years qualifies for 17.5%, her PIR steps up to 28%. It is worth checking your PIR at the start of each tax year and telling your provider if it changes.

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Wiremu, a lower headline rate that still wins

Wiremu earns $90,000, so his marginal rate is 33% and his PIR is 28%. He has $30,000 to invest. His bank offers a term deposit at 5.20%, while a term PIE offers a slightly lower 5.00%. The higher headline looks better, but does it win after tax?

  1. Interest: $30,000 × 5.20% = $1,560
  2. Tax: $1,560 × 33% = $514.80

After-tax interest: $1,045.20 (a 3.48% after-tax return)

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Yield to Maturity Guide

NZ Government Bond Investment

Retiree choosing between bonds for income

  1. NZ Treasury 2-year bond
  2. Face value: $10,000
  3. Coupon: 3.5% ($350/year)
  4. Price: $9,920
  5. YTM = [350 + (10,000-9,920)/2] / [(10,000+9,920)/2]
  6. YTM = [350 + 40] / 9,960

YTM = 3.92%

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Corporate Bond vs Government Bond

Investor comparing safety vs return

  1. $10,000 face, 4% coupon, $10,000 price, 5 years
  2. YTM = 4.0% (at par)
  3. Credit rating: AAA (virtually risk-free)

The same calculation on its own, with others like it

Interest Rate Change Impact

Investor holds bond when rates rise

  1. Bought at par: $10,000
  2. Coupon: 4.5%
  3. Maturity: 10 years (now 9 years left)
  4. YTM at purchase: 4.5%
💡 Key Lesson

Rising interest rates cause bond prices to fall, creating paper losses. But if you hold to maturity, you still receive all promised coupons plus face value. Only realize loss if you sell. This is why bonds are considered "safe" for buy-and-hold investors despite price volatility.

The same calculation on its own, with others like it

Building a Bond Ladder

Retiree creates steady income stream

  1. $97,000 (5 bonds)

The same calculation on its own, with others like it

NPV Guide - Net Present Value

Restaurant Expansion

Decision: Open second restaurant location

  1. Initial fit-out: $350,000
  2. Equipment: $150,000
  3. Initial inventory: $50,000
  4. Total: $550,000

The same calculation on its own, with others like it

Solar Panel Installation

Homeowner decision: Install solar panels

  1. System cost: $18,000
  2. Government rebate: -$3,000
  3. Net investment: $15,000

The same calculation on its own, with others like it

Rental Property Investment

Evaluate: Purchase rental property

  1. Property price: $600,000
  2. Down payment (30%): $180,000
  3. Renovation: $20,000
  4. Total cash invested: $200,000

The same calculation on its own, with others like it

Present Value of Annuity Guide

Lottery Winner's Choice

Jane wins $5 million lottery, must choose:

  1. PV = $200,000 × [(1 - (1.06)^-30) / 0.06]
  2. PV = $200,000 × 13.765

PV of Option B = $2,753,000

The same calculation on its own, with others like it

Court Settlement Structured Payment

Legal settlement offers two options:

  1. PV = $3,500 × [(1 - (1.004167)^-240) / 0.004167]

PV = $531,947

The same calculation on its own, with others like it

Early Retirement Buyout

55-year-old offered early retirement package:

  1. Planned retirement: age 65
  2. Pension at 65: $5,000/month for life
  3. Expected lifespan: age 85 (30 years of pension)

The same calculation on its own, with others like it

Other situations
Running a business   Buying a first home   Running a household   Debt you cannot pay   Scams, faulty goods and your rights   Changing or losing a job   Separation, death and estates   Understanding your pay and tax   Owning a rental or holiday home   Starting work for the first time  
Every situation

Situations are taken from the guides listed above and are worked examples for education, not advice. Figures used in an example were current when the guide was written; the guide holds the maintained figure. Last reviewed 2026-09-07. See also the arithmetic on its own, every question the site answers and the guides.