After saying I would count on 6% annual return for my savings, I read that the stock market return since 1926 has averaged 10% annually. However, I still like to be conservative and use 6%.
I have now calculated $1/day saved for 50 years and 30 years and 10% and 6%.
50 years and 10% ----- $537,687
30 years and 10% ----- $ 69,632
50 years and 6% ----- $116,074
30 years and 6% ----- $ 30,713
I used the future value function in excel. Not sure why I calculated $537,000 vs. $425,000 in the article. The calculation shows how time and interest affect the outcome. Both are big factors. Since I expect to only have 30 years and get 6%, I would only have $30,000 saved. If I increase it to $10 per day, I will end up with $300,000 after 30 years.
I guess $1 per day was too good to be true. However, saving $10 per day @6% returns to get $300,000 still sounds like a good deal to me.
This is not financial advice. Please consult a professional advisor.
Copyright © 2006 Achievement Catalyst, LLC
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1 comment:
I personally love playing with compound interest tables and calculations. It is really amazing what regular small contributions can do given the investment time frame. With a 30 year time frame, most people can expect to be in the millionaire club with $200 per month contributions.
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