Question
Q12 Quintan decides to disregard his grandfather's advice and invest his $10,000 into the stock market. Quintan researches inflation rates, finding the historical average is
Q12 Quintan decides to disregard his grandfather's advice and invest his $10,000 into the stock market. Quintan researches inflation rates, finding the historical average is 3.26% per year. He expects his small, diversified portfolio to make 7.52% in interest annually. If Quintan's assumptions about inflation (3.26%) and his returns (7.52%) are true, what will be the real value of his portfolio at the end of 5 years?
Q13 Ella has plans to retire at 65, however, she does not know how much she should have saved by then. She expects to live until the age of 90 and wants to live on an annual income of $72k (real value) that would come out of her retirement savings. Although she can't say for sure, Ella hopes that inflation rates will be at 4.14% and her investments will yield a return of 7.14% throughout her retirement.
Using her assumptions, how much should Ella aim to have saved by the time she's 65? (Hint: she wants to have $0 when she is 90)
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