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Started By
Message
Am I Understanding Compounding Interest Correctly?
Posted on 5/12/15 at 11:10 am
Posted on 5/12/15 at 11:10 am
Opened a Roth IRA with a VFINX fund last October. Started with $3200. Been putting about $50 in each month and have upped it to $100.
I used a calculator that said in thirty years, if I keep up the $100/month payments, my VFINX could be worth about $175k.
Is this really a safe bet? Am I using the right calculator to figure this out?
My wife and I are trying to figure out what we have in retirement so far and what we can expect in the future before making a career change.
I used a calculator that said in thirty years, if I keep up the $100/month payments, my VFINX could be worth about $175k.
Is this really a safe bet? Am I using the right calculator to figure this out?
My wife and I are trying to figure out what we have in retirement so far and what we can expect in the future before making a career change.
This post was edited on 5/12/15 at 11:10 am
Posted on 5/12/15 at 11:14 am to StringedInstruments
thats assuming just north of 8% return average which is pushing it. It certainly could happen but for the sake of projections it's better to estimate a more conservative return of 6%.
Posted on 5/12/15 at 11:22 am to StringedInstruments
Make sure you account for the value of money in 30 years.
Posted on 5/12/15 at 11:35 am to StringedInstruments
quote:
My wife and I are trying to figure out what we have in retirement so far and what we can expect in the future before making a career change.
while important, retirement is a looooooong way off. consider it, but the variables between now and 3 decades from now are such that id consider it in very broad sense when considering career changes.
Posted on 5/12/15 at 12:45 pm to KosmoCramer
quote:
Make sure you account for the value of money in 30 years.
This. It's helpful to set savings goals by determining the expected return (6-8% as above) then subtracting inflation. So for retirement calculations I always use 4%, that way I can think in terms of today's dollars.
And about your $100...you will increase that with time, I'm sure, just from wage growth, promotions, etc. Calculators that allow you to index your deposits are out there.
Posted on 5/12/15 at 9:20 pm to StringedInstruments
Those who understand interest earn it. Those who don't pay it.
I read that today.
I read that today.
Posted on 5/13/15 at 8:26 am to HailToTheChiz
stupid question but does a 401k compound interest as well?
This post was edited on 5/13/15 at 8:30 am
Posted on 5/13/15 at 10:06 am to sonoma8
Any account that earns a return that is reinvested experiences compound interest.
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