Index Fund Investing Let's continue with some more specifics :) Let's pretend that at the age of twenty we start to invest in Index Funds which is pretty much "buying the entire stock market." Think of it as a giant mutual fund. Let's pretend that in our twenties we invest one hundred dollars a month into an index fund that pays us 8% APR compounded monthly. Let's pretend that we make this a habit we do it for ten years. Then in our thirties we invest two hundred dollars a month. Let's
Index Fund Investing Let's continue with some more specifics :) Let's pretend that at the age of twenty we start to invest in Index Funds which is pretty much "buying the entire stock market." Think of it as a giant mutual fund. Let's pretend that in our twenties we invest one hundred dollars a month into an index fund that pays us 8% APR compounded monthly. Let's pretend that we make this a habit we do it for ten years. Then in our thirties we invest two hundred dollars a month. Let's
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:10:40
Back
G
Finance Millionaire.docx
for-smarter-investing
Index Fund Investing
Let's continue with some more specifics :)
Let's pretend that at the age of twenty we start to invest in Index
Funds which is pretty much "buying the entire stock market."
Think of it as a giant mutual fund.
Let's pretend that in our twenties we invest one hundred dollars
a month into an index fund that pays us 8% APR compounded
monthly. Let's pretend that we make this a habit we do it for ten
years.
Then in our thirties we invest two hundred dollars a month. Let's
pretend that we make this a habit we do it for ten years.
Then in our fourties we invest three hundred dollars a month.
Let's pretend that we make this a habit we do it for ten years.
Then in our fifties we invest four hundred dollars a month. Let's
pretend that we make this a habit we do it for ten years.
And finally, in our sixties we invest five hundred dollars a
month. Let's pretend that we make this a habit we do it for ten
years.
Use a Sheets or Excel document. Screenshot the appropriate
support into this document and answer the questions in this
document. OR use your algebra muscles as support if you would
rather.
1. How much money did we invest in total?
2. How much money will we have in total at the end of all of
our investing?
3. How much interest did we earn by investing in these index
funds?
Annuity Investing
Now let's pretend that we buy an annuity at the age of 70 with
how much money we have in total from our index fund
investing. Use the number you got above in #2 (hint: it should
be somewhere between one and two million dollars btw).
Let's buy a twenty year annuity that pays us 5% APR
compounded monthly,
4. How much money will we get paid each month?
5. How much money in total will we get paid back?
6. How much interest will we make from the annuity?
Let's put both of these investments together in our minds
To clarify, we invested in index funds and made money. Then
we bought an annuity and made more money.
7. In total how much money do we end up investing out of our
own pockets (not investing interest from the bank, but just
our own money that we personally saved from 20s through
60s)?
8. How much money in total do we get back from the
annuity?
998
Dashboard Calendar
DE
11
To Do
A
.. LTE
Notifications
Inbox
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education