Value if $25K Invested over 10, 25, 50 years?

Question

Just curious what $10K, $25K, even $50K invested today in the markets would be worth in the future...assuming I don't add anything else. Or, what if I added $250-$500/month every year?

Answer 1

The second answer is correct. Smart to include inflation. Most people forget it. I would go w/ 3% inflation instead.

Here is the formula for future reference.
r = interest in a yr
i = inflation

tr = r - i; let's say 8% from stocket minus 3% inflation which is 5%

F = future value
P = present value
N = yrs

F = P *(1 + tr)^N

1. F = 50,000 (1 + 0.05)^50

Now you want to add $500 a month. It's an annuity question now. Take 500 x 12 because the formula is in terms of yrs, which means you add $6,000 each yr. Let's assume the same true interest (stated interest minus inflation).

A = Added cash flow each yr

FV = A[ ((1+rt)^N -1)/rt]


2. FV = 6,000[((1.05)^49-1)/0.05]

Noticed I used 49 instead of 50. It's because the formula was designed to calculate a payment next yr. Go figure. Simply use the 1st equation to solve for the single $6,000.

3. FV =6,000(1.05)^50

Now sum up lines 1,2, and 3.

I know it's a lot of math. I don't have a calc in front of me. Good luck. Start saving early and often. You don't want to eat cat food when you're old and can't work.

Answer 2

If you invested a flat 25k, at a gross return (income & growth) of say 6% less say 2% inflation which gives 4% net growth per year the value after 10 years will be $37,000 25 years it will be $66,600 and 50 years will be $177,667.

If invested an additional 250 per month over 10 years = $74000, over 25 years $196,000 and 50 years $661,450

Shows the power of compounding doesnt it

Hope this helps

Answer 3

You can just plug in the numbers in this calculator and check all the scenarios you want....

http://www.geocities.com/twong18

Answer 4

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