Question

Thirty years from now you want to have a nest egg of $1,000,000. If you can invest at an APR of 6%, what must your regular monthly deposit be to achieve this nest egg?

Answer 1

Given,

Future value = $1000000

APR = 6% or 0.06

No. of years = 30 years

Solution :-

Monthly rate (r) = 0.06/12 = 0.005

No. of months (n) = 30 years x 12 = 360 months

Monthly deposits = (Future value x r) [(1 + r)ⁿ - 1]

= ($1000000 x 0.005) [(1 + 0.005)³⁶⁰ - 1]

= $5000 [(1.005)³⁶⁰ - 1]

= $5000 [6.02257521226 - 1]

= $5000 5.02257521226 = $995.51

Thus, your regular monthly deposits must be $995.51 to achieve this nest egg.