Question

A twenty-year-old decides to save Rs.1,000 per month into a retirement account that will mature when she will turn 65. How much will she accumulate assuming that the she gets a return @12% per annum compounded monthly? How much will a 40-year-old get if he makes a similar investment? How much more does he need to invest to get the same amount?

Answer 1

in 65 years:

$1000*\frac{(1+0.12/12)*((1+0.12/12)^{(65-12)*12}-1}{1.01-1}=56,485,795.36$

40-year-old:

$1000*\frac{(1+0.12/12)*((1+0.12/12)^{(65-40)*12}-1}{1.01-1}=1,897,635.09$ - will get

needs to invest per month:

$56,485,795.36-1,897,635.09=54,588,160.27$

$54,588,160.27/\frac{(1+0.12/12)*((1+0.12/12)^{(65-40)*12}-1}{1.01-1}=29,054.08$