You are planning to save for retirement over the next 25 years.?
You are planning to save for retirement over the next 25 years. To do this, you will invest $850 per month in a stock account and $450 per month in a bond account. The return of the stock account is expected to be 10.5 percent, and the bond account will pay 6.5 percent. When you retire, you will combine your money into an account with a 7.5 percent return.
How much can you withdraw each month from your account assuming a 20-year withdrawal period?
- Don GLv 79 months ago
I get $12,612.58 per month.
1) FV Ann of 850, N 300, R .875% = 1,228,648.53
2) FV Ann of 450, N 300, R .54167% = 336,978.54
3) PV after 25yrs = 1,565,627, N 240, R .625% = PMT of 12,612.58
- A.J.Lv 79 months ago
This is a mathematical calculation with a lt wrong with it in terms of reality.
Stocks are never stable.
Interest rates are well above current market rates, and also fluctuate over time unless fixed rate bonds and there are risks of losses in all investments that are not guaranteed. It does not account for inflation which is that costs rise over time on average. In saving for retirement, people should earn more over time with increased skills, inflation of salary, and savings is usually best as percent of earnings.
25 years $850 per month stocks,$450 per month bonds
Returns 10.5 percent APR Stocks and 6.5 percent APR Bond
7.5 percent return 20-year withdrawal period
per month withdraw
10.5% APR compounded monthly is 0.911816815% per month, balance reinvested monthly
6.5% APR compounded monthly is 0.57414008% per month balance reinvested monthly
25 years is 300 months
Stock account has $1,338,318.39 after 300 months
Bond account has $360,288.03 after 300 months
The 7.5% APR 20 year can be done as an annuity amortization, similar to a mortgage as 240 months
$13,683.86 per month
- AlexanderLv 79 months ago
And if the stocks are invested in a company that goes broke and are thenceforth worthless?
- Anonymous9 months ago
Anyone who is 25 years from retirement and invests 1/3 of their money in bonds is a moron.
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- Anonymous9 months ago
You should do your own homework.
- GregLv 79 months ago
Want me to wash your car too? Apply the formulas you have "learned" or jump on Excel and let it help you.