Question

You plan on retiring in 30 years and want to have $3,000,000 saved in your retirement account. You will earn an average rate of return of 6% on your investments. How much will you need to invest each month in order to get to your goal.

Answer 1

Future Value = $30,000,000

Interest rate = 6%

Number of Years = 30

Compounding = 12 [Monthly]

Number of periods = 30 * 12

= 360

Interest rate per period = 6%/12

= 0.5%

Future Value of Annuity = P * [(1+R)^N -1]/R

Where, P = Payment

R = Rate of interest per period

N = Number of periods

30,000,000 = P * [(1+ 0.5%)^360 -1]/0.5%

30,000,000 = P * [(1.005)^360-1]/0.005

30,000,000 = P * (6.02257521226 -1)/0.005

30,000,000 = P * 1004.51504245

P = 30,000,000/1004.51504245

P = $29865.1575459

The Monthly Payment should be Approximate to $29865.1575459