Help me with this basic Math

[F1980]

Let's say you are 21 years old and you put $1 into your 401k. And you get an average of 12% returns every year. How much money will you have when you turn 67 years old?

What would the Math equation of this look like?

You start off with $1.
The next year, you wll have $1.12 when you're 22 years old.
The next year, you wll have $1.25 when you're 23 years old.

etc..

At age 67, how much will you have?

 

[chardog]

This is not that basic

Principal x interest to the power of years would be my guess.

(1 x 1.12)^67

This makes sense but I’m not sure

 

[Fedorgasm]

I can do it in Excel but not in my head after I'm a third way into a bottle of talisker.

However, I did just use a compound interest calculator and it says 183 bucks.

So I'd suggest investing more than a dollar

 

[HeffDoesWant]

In excel,
In cell a1 put 1
In cell 2 put =(a1*1.12)+1
Drag cell a2 down so it copies the formula to all cells down to cell a47


Sorry the above is investing a dollar each year. Below is just $1 at age 21
In excel,
In cell a1 put 1
In cell 2 put =(a1*1.12)
Drag cell a2 down so it copies the formula to all cells down to cell a47

 

[HeffDoesWant]

I can do it in Excel but not in my head after I'm a third way into a bottle of talisker.

However, I did just use a compound interest calculator and it says 183 bucks.

So I'd suggest investing more than a dollar

$183.66 is correct.

 

[Sweater of AV]

It's called compound interest. Here's the formula:

Amount = Principal * (1 + rate)^n.

-Principal is your initial investment of $1.
-The rate is 0.12.
-n is the number of years (46 in this case).

As mentioned above, the result is $183.67.

 

[GSP_37]

I think 15% per year compounded would double in 5 yrs. I think that's what I learned in college finance.

I would break out the rate of return in a separate cell to allow easy what if calcs by replacing the RoR over and over.

 

[Kung Fu Kowboy]

 

[fordman7795]

$183.66 is correct.

In the correct answer with no rounding. But the second year at 1.2544 would round down thereby lowering each additional year but there are years rounded up as well so the real correct answer is somewhere around there

 

[PG29 red0 Jr]

I think 15% per year compounded would double in 5 yrs. I think that's what I learned in college finance.

I would break out the rate of return in a separate cell to allow easy what if calcs by replacing the RoR over and over.

Yea, sounds right since the rule of 72 is based on doubling your money in 7 years with 10% returns (average S&P 500 returns).

 

[Stoic1]

I remember my grandad telling me, around 21 years old, that I should put $100 a week into investments and I would be a millionaire by the time I was 35. I tried all kinds of math formulas to figure all this compounding shit out.




Like where the fuck is this extra hundred dollars a week coming from? Motherfucker, we are eating mac-n-cheese again tonight.

 

[Ibm]

Inflation will offset that probably making the money less than its worth.

 

[djacobox372]

If you raise the interest to 13.581% you'd have 3fity.

 

[Chesten_Hesten]

I can't read, sorry.

 

[TheTickG]

Let's say you are 21 years old and you put $1 into your 401k. And you get an average of 12% returns every year. How much money will you have when you turn 67 years old?

What would the Math equation of this look like?

You start off with $1.
The next year, you wll have $1.12 when you're 22 years old.
The next year, you wll have $1.25 when you're 23 years old.

etc..

At age 67, how much will you have?

If you are 21 today and invest that 1 dollar for 46 years, assuming inflation doesn't get too crazy, you should be able to order a small coffee with that 184 dollars.