Savings Annuities Future Value Annuities How do people
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Savings Annuities Future Value Annuities
How do people save? •
How do people save? •
What if I invested it @3% Year Starting Amount Interest Deposit Ending Amount 1 $0 $0 $1000 2 $1000 $30 $1000 $2030 3 $2030 $60. 90 $1000 $3090. 90 4 $3090. 90 $92. 73 $1000 $4183. 63 5 $4183. 63 $125. 50 $1000 $5309. 13 You walk away with an extra $309. 13, by investing it, not just sitting on it.
Annuity Formula • A = How much the annuity is worth when it matures PMT – The Deposit r – annual interest rate c - # of compounding periods in a year t - # of years
Same question w/ formula •
When should you start savings for Retirement? • Mr. Millar deposits $100 into an investment account every month that averages 4. 2% return, compounded monthly. I plan to retire when I’m 60. How much will I have saved, if started investing when I was: – 20 years old, 25 years old, 30 year olds? 40 years old? , 50 years old?
The Results When I start 20 years old How much my investment will be worth when I’m 60? $124, 281. 17 $28, 907. 26 25 years old $95, 373. 91 30 years old $71, 933. 55 40 years old $37, 513. 49 50 years old $14, 881. 31 $23, 440. 36 $34, 420. 06 $22, 632. 18 The answer : Start Investing Now!
The Idiot Friend Question • We all have a friend or family members who wastes money on a particular vice (Smoking, Drinking, Coffee, Gambling, Cell Phone Usage etc. ) 1) Calculate how much they(or you) spend on that vice every month? 2) Suppose they quit that vice cold turkey and start to invest that money every month into an account that earns 2. 6% compounded monthly. How much money could they save if they saved for 20 years?
