TWO-STRATEGY STRESS TEST
Compare what partners expect to do, not just what they promise
This calculator compares two savings strategies from the same opening balance and horizon while preserving the assumptions that make them genuinely different. Each plan has its own deposit, follow-through, yield, and fee. The output supports a strategy discussion; it does not rank account safety or predict investment performance.
| Strategy | Effective monthly deposit | Annual yield % | Total fees | Modeled yield | Ending balance |
|---|
Detailed calculation process
Formula, declared symbols, substitutions, intermediate results, and reconciliation
ei = mi ai; Bi,t = Bi,t−1(1 + yi/12) + ei − fi; Δ = BA,n − BB,n
The model first converts each promised deposit into an expected deposit using its own adherence. It then runs two separate monthly recurrences with strategy-specific yield and fee assumptions before comparing ending balances.
| Symbol | Meaning | Default A; B | Unit |
|---|---|---|---|
| B0, n | Common opening balance and horizon | 4,000; 18 | USD; months |
| mi | Promised monthly deposit | 600; 750 | USD/month |
| ai | Expected adherence | 0.90; 0.70 | dimensionless |
| yi | Nominal annual yield | 3%; 1.5% | annual percent |
| fi, Bi,n | Monthly fee and ending balance | 0; 8; calculated | USD/month; USD |
Default substitution: eA = 600×0.90 = $540 and eB = 750×0.70 = $525. A repeats B×1.0025+$540; B repeats B×1.00125+$525−$8 for 18 months, then the ending values are compared.
Five comparison steps
Construct two strategies that are meaningfully different
- Use one verified opening balance and one decision horizon for both plans.
- Write the actual transfer promise for each strategy before estimating follow-through.
- Base adherence on prior months, automation reliability, and budget capacity rather than enthusiasm.
- Use account-specific rates and recurring fees, documenting the applicable date and compounding convention.
- Compare ending cash, then review non-modeled liquidity and risk before deciding.
Five scenario fundamentals
Keep behavioral and account assumptions on separate lines
Common baseline
The identical cash position from which both strategies start.
Promised deposit
The amount a plan intends to transfer before missed or reduced contributions.
Effective deposit
The promised amount multiplied by that plan's own adherence assumption.
Carrying fee
A recurring charge removed from the balance regardless of deposit success.
Scenario spread
The signed A-minus-B ending balance, not proof that one account is safer.
Three strategy deep dives
Find the assumption capable of reversing the ranking
Behavioral dominance
Deposit adherence usually controls short-horizon results more strongly than a small yield difference. A stricter plan can therefore underperform a modest automated plan.
Rate comparability
An advertised rate may be variable, conditional, tiered, or temporary. Compare rates only for matching account types, balances, dates, and fee conditions.
Unpriced risk
Ending balance ignores volatility, withdrawal restrictions, insurance coverage, penalties, taxes, and emergency access. Those conditions require a separate decision record.
Scenario evidence
Document why each number belongs to its strategy
Save account disclosures, current rate pages, fee schedules, transfer histories, missed-deposit reasons, budget capacity, withdrawal rules, and the date the comparison was made. Do not borrow adherence from one partner's account to justify another plan.
Comparison limitations
What two fixed recurrences cannot decide
- Rates and adherence remain constant throughout the horizon.
- Deposits occur at month end and fees are deducted monthly.
- Taxes, inflation, volatility, withdrawal penalties, and account insurance are excluded.
- Shared ownership, contribution fairness, and household opportunity cost are not evaluated.
- A higher ending balance is not automatically the safer or more suitable plan.
Scenario glossary
Six terms for an honest strategy comparison
- Baseline parity
- Both strategies begin with identical cash and horizon.
- Adherence
- The expected fraction of a promised recurring deposit actually made.
- Nominal yield
- An annual percentage converted here to a monthly rate.
- Effective deposit
- Promised cash after the adherence adjustment.
- Scenario spread
- The signed difference between ending balances.
- Sensitivity reversal
- A plausible assumption change that switches the leading strategy.
Two different strategy decisions
Automation discipline and higher-yield complexity
Smaller automated transfer
A modest direct deposit has strong historical adherence and no fee. It can beat a larger manual pledge that is often reduced late in the month.
Conditional high-yield account
A higher advertised rate also carries a fee and activity requirements. Partners run a lower-rate scenario when those conditions are unlikely to remain satisfied.
Important note
Compare account terms and risks outside this arithmetic
Before moving money, verify the institution, deposit insurance where applicable, liquidity restrictions, market risk, tax consequences, beneficiary arrangements, and account ownership. Seek qualified advice when the decision is material.
Strategy questions
Frequently asked questions
Why give each scenario its own adherence?
A larger promised deposit is not automatically the larger expected deposit. Separate adherence prevents ambition from being mistaken for execution.
When should fees be entered?
Use recurring account or service charges that directly reduce the savings balance each month; keep unrelated household costs outside.
Is the higher projected balance always preferable?
No. Liquidity, risk, access, deposit insurance, tax treatment, volatility, and household stress are not summarized by ending cash.
How is monthly yield applied?
Each scenario applies one-twelfth of its entered nominal annual yield to the current balance, then adds the adherence-adjusted deposit and subtracts the fee.
Can a negative return be modeled?
No. This planning comparison accepts zero or positive yield assumptions; a volatile investment needs a risk-aware model rather than a fixed negative guess.
What makes the comparison fair?
Use the same opening balance and horizon, document why deposits differ, and stress-test both strategies with conservative adherence and yield values.
Official sources and follow-on tools