Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I am currently 25 years old (so basically 35x12=420 months until I retire). Additionally, I have $20,000 invested in a brokerage account that I expect

I am currently 25 years old (so basically 35x12=420 months until I retire).

Additionally, I have $20,000 invested in a brokerage account that I expect to give me a return of 8% compounded semi-annually. I am planning to work until I am 60 and put some money away monthly in a investment account that gives me a return of 5% compounded monthly. (First payment will be one month from now and last payment will be the month I retire. You can assume I turned 25 today). As soon as I retire, I plan to move somewhere warm and buy a house for $600,000 and invest all my remaining money into risk free treasury bonds that will give me a return of 2% compounded monthly. My expected monthly expense for the remainder of my life is $5000 a month, that I will be needing at the beginning of each month. Hopefully, Ill live until I am 80 years old.

a) How much should I put away each month in my savings account until I retire, so I can meet all my retirement needs. (Try not to round any intermediate results)

b) Recalculate the same above question but assume my brokerage account that gives me 8% compounds continuously instead of semianually.

Thank you! I will upvote upon correct answer!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions