Question
Today is your 20th birthday, and you just started working full-time, earning $50,000 per year. Your goal is to have $1 million by your 55th
Today is your 20th birthday, and you just started working full-time, earning $50,000 per year. Your goal is to have $1 million by your 55th birthday (i.e., 35 years from today). Assume 3% inflation per year, and a marginal federal plus state income tax rate of 32%. if you can earn 11% per year annualized in an S&P 500 mutual fund, after all expenses, inside a Roth IRA, how much would you need to save each month to have that $1 million if:
a) that $1 million is in future nominal dollars; or
b) if that $1 million is in today's equivalent purchasing power future dollars;
c) whay will dollar cost averaging do to your investment? why?
d) what is the after tax monthly cost of your investment?
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