Question

If a person starts investing $100 per month starting at age 21, and that money earns a 7% return every year, how much will this person have when turning 70 years old?

Answer 1

Two assumptions: the deposit is made at the beginning of the month and that the amount accumulates for 70 years (not until you are 70). A = final amount d = amount of deposit r = rate if interest n = number of deposit/calculations per year t = number of years A = d { ((1 + r/n )nt+1 - (1 + r)) / r } A = 100 { ((1 + 0.00583)841 - (1 + 0.00583)) / 0.07 } A = 100 { (132.793 - 1.0053) / 0.07 } A = 100 · 1882.68143 A = 188,268.14 After 70 years you shall have $188,268.14. No wonder Einstein called compound interest the eighth wonder of the world.