- Budgeting
- Cash Management
- Consumer and Mortgage Loans
- Debt and Debt Reduction
- Time Value of Money 1: Present and Future Value
- Time Value of Money 2: Inflation, Real Returns, Annuities, and Amortized Loans
- Insurance 1: Basics
- Insurance 2: Life Insurance
- Insurance 3: Health, Long-term Care, and Disability Insurance
- Insurance 4: Auto, Homeowners, and Liability Insurance
- The Home Decision
- The Auto Decision
- Family 1: Money and Marriage
- Family 2: Teaching Children Financial Responsibility
- Family 3: Financing Children’s Education and Missions
- Investments A: Key Lessons of Investing
- Investments B: Key Lessons of Investing
Problem 10: Becoming a Millionaire
Your buddy thinks that to become a millionaire is totally beyond his earning abilities. You, the financial wizard that you are, plan to show her otherwise. Assuming your friend is twenty-five years old and will retire at age sixty-five, and assuming a 6 percent interest rate, how much will she have to save each month to reach her goal of becoming a millionaire when she retires? How much each month if she earns 9 percent on her investments?
Clear your memory and set payments to monthly. FV = 1,000,000 N = (40*12) I = 6%, Solve for Payment (PMT)
PMT = $502.14. She will need to save $502 per month.
At 9 percent interest:
Clear your memory and set payments to monthly. FV = 1,000,000 N = (40*12) I = 9%, Solve for Payment
PMT = $213.62. She will need to save only $214 per month.
It’s not that hard to become a millionaire if you will invest a specific amount every month!
