### Author Topic: Is my math right?  (Read 4057 times)

#### mooshie

• Posts: 22
##### Is my math right?
« on: April 13, 2015, 06:20:18 PM »
So I was just playing around with numbers today. DH and I have \$136,290 in investments currently.
Assuming that we max out DH's 401K and both of our ROTH IRAs each year until the end of 2026 and earn an average of 10% per year my math says we'd have 1,018,880 by the end of 2026. Just checking to make sure I didn't neglect something that would make a change to this?
Also this beginning figure includes the remaining 401K contributions for this year just FYI.
Thanks!

#### MDM

• Walrus Stache
• Posts: 9413
##### Re: Is my math right?
« Reply #1 on: April 13, 2015, 06:48:51 PM »
So I was just playing around with numbers today. DH and I have \$136,290 in investments currently.
Assuming that we max out DH's 401K and both of our ROTH IRAs each year until the end of 2026 and earn an average of 10% per year my math says we'd have 1,018,880 by the end of 2026. Just checking to make sure I didn't neglect something that would make a change to this?
Also this beginning figure includes the remaining 401K contributions for this year just FYI.
Thanks!

That's exactly (subject to rounding) what I get, so unless we are both wrong....

Assumptions
- The \$136,290 includes 2015's 401k and IRA contributions, and those were made at the beginning of 2015 so there are 12 years growth until the end of 2026.
- By max you mean \$18K + \$5.5K + \$5.5K = \$29,000/year
- The \$29K is invested at the beginning of the year, starting in 2016
- Returns compound annually
- the Excel FV function works

Value of the \$136,290 at the end of 2026 = \$136,290 * (1 + 10%)^12 = \$427,736.40

Value of the series of \$29K investments = FV(10%,11,-47000,0,1) = \$591,144.23

Total = \$1,018,880.63

Of course, if the assumptions are wrong then the results will differ.
« Last Edit: April 13, 2015, 07:51:58 PM by MDM »

#### Joshua

• Posts: 28
##### Re: Is my math right?
« Reply #2 on: April 13, 2015, 07:47:11 PM »
Nominally yes, although inflation will take it's bite.

#### velocistar237

• Handlebar Stache
• Posts: 1422
• Location: Metro Boston
##### Re: Is my math right?
« Reply #3 on: April 14, 2015, 11:34:48 AM »
Why the Roth? Do you not qualify for Traditional?

It won't change the number you're looking at, but it would give you a little extra to put in taxable accounts each year.

#### jmusic

• Bristles
• Posts: 465
• Location: Somewhere...
##### Re: Is my math right?
« Reply #4 on: April 14, 2015, 08:41:59 PM »
10% is a pretty high return also.  Historical market average is around 7%.

#### obstinate

• Pencil Stache
• Posts: 882
##### Re: Is my math right?
« Reply #5 on: April 23, 2015, 07:06:01 PM »
- the Excel FV function works
I think PV is the one you're interested in. That'll give you a better sense of what the investment is worth in the context of your current spending.

#### Cougar

• Bristles
• Posts: 344
##### Re: Is my math right?
« Reply #6 on: April 24, 2015, 01:17:18 PM »

its right.

but i would second this.

10% is a pretty high return also.  Historical market average is around 7%.

i play around with the numbers myself on if i could make better than average, 7 percent; for a few years to get fire sooner but you usually get burned trying to beat the avg unless youre very patient like going all cash in 2007 and going all in the market again in 2010, but the people that did that could probably fit in a small room.