The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: heybro on April 27, 2018, 02:39:28 AM

Ever play around with the compound interest calculators?
If you put $100,000 in the stock market TODAY and let it sit for 30 years, at 8 percent, it will be a million dollars!
What little amount can do so much!
It seems you are either asset building and letting interest work for you or you are going in to debt and letting interest bury you.
I get so surprised by these interest calculators every time! haha.

Yes. Interestingly, for ER people, you don't have it compounding as long. But that's what blows my mind. How anyone working for 30+ years isn't worth ~$1M. It only takes like $10k/yr!!!
Also, I'd recommend getting familiar with Excel or Google Sheets for compound interest calculations. Read about the PV, FV, and PMT functions. I keep a random excel document open most of the time for handy backoftheenvelope thinking type problems. Loads of fun!

But that's what blows my mind. How anyone working for 30+ years isn't worth ~$1M. It only takes like $10k/yr!!!
EXACTLY! wow! yes!

How anyone working for 30+ years isn't worth ~$1M. It only takes like $10k/yr!!!
The opening post implies $100K is invested from Day One of the 30 year period. $10K invested per year, starting from $0, probably will take more time to reach $1M.

How anyone working for 30+ years isn't worth ~$1M. It only takes like $10k/yr!!!
The opening post implies $100K is invested from Day One of the 30 year period. $10K invested per year, starting from $0, probably will take more time to reach $1M.
Assuming one starts with $0, invests $10k at the end of each year, and gets a return of 7%, I calculate that one would have ~$945k at the end of year 30, and $1.021M at the end of year 31 (and since you didn't invest until the end of year 1, that's $1+M from investing $10k/year for 30 years).

How anyone working for 30+ years isn't worth ~$1M. It only takes like $10k/yr!!!
The opening post implies $100K is invested from Day One of the 30 year period. $10K invested per year, starting from $0, probably will take more time to reach $1M.
Open Excel
A1 =FV(0.07,30,0,100000)
A2 =FV(0.08,30,0,100000)
A3 =PMT(0.07,30,0,1000000)
A1 is $100k at 7% for 30 years.
A2 is $100k at 8% for 30 years.
A3 is how much per year to get $1M at 7% after 30 years.