What would $40,000 be equivalent to in 50 years?

Answer 1

Its hard to say, you don't know what it will be invested in. If its invested in a bank at 5 % compound interest there are equations you can easily find that will show how it does. Off the top of my head I'd estimate it would do better than double by that time. At 5% simple interest, nowhere near as good. Just held at no interest its absolute value would decline by whatever inflation averaged over the next 50 years, and that would probably be pretty bad, it might be worth the equivalent of $15,000 or even less by then. Of course if it were invested in just the right stocks at just the right time, or some other appreciating asset, it could literally be worth billions (Microsoft bought in 1985 for example). Anyway, try some of those simple and compound interest tables. Good luck!

Answer 2

Morgan:

That depends on what do you do with them. If you just hold on to them, they will lose value with inflation. If we assume inflation at 3% per year, you will rougly lose 3% of the remaining value of your investment every year. For example, at 3% inflation, after the first year your $40,000 will be worth $38,835 in today's dollars (40,000 / 1.03). If we follow the same reasoning, after 50 years your $40,000 will have a purchasing power equivalent to $9,124 of today's dollars. What you have to do to defend the value of your money is to invest it in something that gives you a rate of return of at least the rate of inflation. Even one or two points above the rate of inflation will dramatically increase the value of those initial $40,000 due to the law of compounding.