Math is simple - Either you know how to calculate it or you don't - Edit 1
Before modification by HyogaRott at 04/03/2013 05:28:34 PM
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True, but if you have a 50 year investment that compounds interest weekly you should call the Fed; they need to have the Treasury print (a LOT) more money.
View original postThere are 52 weeks in a year (composed of 12 months), not 4 weeks a month .
True, but if you have a 50 year investment that compounds interest weekly you should call the Fed; they need to have the Treasury print (a LOT) more money.
Again you are being illogical. You calculated the income and thus the amount set aside for investment using 4 weeks a month (that means 48 weekly periods 412=4
instead of 52 weeks in the year, then dividing by 12 to achieve an average monthly. You lost 4 pay cycles by doing so which is what threw off your monthly savings amount.74052=14560
14560/12=1213.33
1213.33.04=48.53 <- I rounded down
--OR--
74052=14560
14560*.04=582.4
582.4/12=48.53
If you had bothered to actually read my original post, those calculation were self evident. Interest growth occurs in a completely different calculation so does not belong in this part of the discussion.
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Right, I had to guess the interest rate since you did (and still have) not state(d) it, so I used the same 4%. As good as any number if I must just pluck one from the air. Since you stated the return would be ~$1,253,000 though I assume you have at least a ballpark figure in mind, apparently somewhere between 11% and 12% annually. No, SS cannot beat that, but gambling anything that does will be there in 50 years is rolling some pretty big dice.
View original post4% is the amount of the monthly pay that is invested, not the compound interest rate (though 4% is still better than the ROI given by Social Security).
Right, I had to guess the interest rate since you did (and still have) not state(d) it, so I used the same 4%. As good as any number if I must just pluck one from the air. Since you stated the return would be ~$1,253,000 though I assume you have at least a ballpark figure in mind, apparently somewhere between 11% and 12% annually. No, SS cannot beat that, but gambling anything that does will be there in 50 years is rolling some pretty big dice.
You never asked. Standard calculations utilize 8, 10, 12, or 15 percent. I think used about 11, which is very easily achieved over a 50 year period with decent investments, and it is anything but a gamble if you use half a brain.