You are going to retire in 40 years and currently have $100,000. What average annual return would you have to earn on your investment to have $1 million by the time you retire?
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You are going to retire in 40 years and currently have $100,000. What average annual return would you have to earn on your investment to have $1 million by the time you retire?
Future Value = Present Value * (1+r)^n
Where,
r = rate of interest per period
n = no. of compounding period i.e. 40
Future Value = Present Value * (1+r)^n
$1,000,000 = $100,000 * (1+r)^40
$1,000,000/$100,000 =(1+r)^40
10 = (1+r)^40
(10)^(1/40) = (1+r)
1.05925 = 1+r
r = 1.05925 -1
r = 0.05925
r =5.92%
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