You have $50,000 in savings for retirement in an investment earning 7% annually. You aspire to have $1,000,000 in savings when you retire. Assuming you add no more to your savings, how many years will it take to reach your goal

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Carlee Mccoy

14 October, 05:21

You have $50,000 in savings for retirement in an investment earning 7% annually. You aspire to have $1,000,000 in savings when you retire. Assuming you add no more to your savings, how many years will it take to reach your goal

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Evelyn Wood · Answer 1

It would take 45 years to the investment for reaching $1,000,000.

Explanation:

In order to determine in how much time the investment of $50,000, with an interest rate of 7% per year, will reach $1,000,000, we must take into account that in the 1st year the account will have $53,500 (50,000 x 1.07 = 53,500).

If we raised this number to 10, we would obtain that in the tenth year said investment would be worth $98,357.56 (50,000 x 1.07 ^ 10 = 98,357.56)

Following this procedure, raising the initial value (50,000 x 1.07) to 20, we find $193,484.22 in the account.

At 30 years, that is, raised to 30, the value in the account will be $380,612.75 (50,000 x 1.07 ^ 30).

Raising said initial sum to 40 years, the account would have a value of $ 748,722.89 (50,000 x 1.07 ^ 40). In turn, raising the initial value to 45 years, we would obtain an account value of $1,050,122.58 (50,000 x 1.07 ^ 45), with which we can determine that the investment will take 45 years to reach the million dollars.