05-18-2005, 06:32 AM | #1 | ||
Head Coach
Join Date: Oct 2000
Location: North Carolina
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Question for Math/Finance guys
I want to invest X dollars every year for Y years at G% annual growth with I% expected inflation to end up with T dollars (in today's terms) at the end of the investment period.
What equation do I use? Last edited by albionmoonlight : 05-18-2005 at 06:56 AM. |
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05-18-2005, 06:52 AM | #2 | |
lolzcat
Join Date: May 2001
Location: williamsburg, va
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05-18-2005, 06:53 AM | #3 | |
lolzcat
Join Date: May 2001
Location: williamsburg, va
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DOLA:
Crap, nevermind, not what I thought it was...
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05-18-2005, 07:03 AM | #4 | |
lolzcat
Join Date: May 2001
Location: williamsburg, va
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http://personal.fidelity.com/toolbox...h/growth.shtml
This sort of gets you what you want. However, you might have to trial and error. There is no option for "I want to have X Dollars at the end"... you set the Initial balance, years, interest rate, inflation rate, and annual investment.
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05-18-2005, 07:51 AM | #5 |
College Starter
Join Date: Nov 2000
Location: A negative place
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edit - never mind, misread the question.
I think you can get by with: Value you want = X + X(1+i)^1 + X(1+i)^2 + X(1+i)^3 .... + X(1+i)^y. To account for inflation, take your anticipated growth (G) minus the expected rate of inflation (1%) to come up with your true growth (i). Last edited by moriarty : 05-18-2005 at 07:57 AM. |
05-18-2005, 08:36 AM | #6 |
College Starter
Join Date: Nov 2000
Location: A negative place
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Dola:
The equation used in the link Wade posted is probably more accurate. It's basically: X*Z * [Z^0+Z^1+Z^2+...Z^n-1] Where X = payments Z = (1+G)/(1+i) => G = growth %, i = inflation % n = number of years Note: this assumes you invest at the beginning of the year, and neglects the time value of money other than inflation. |
05-18-2005, 09:07 AM | #7 |
High School Varsity
Join Date: Jan 2004
Location: Here
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For more help, search for the term "simple annuity" and beware of the use of negative numbers in the correct places (payments/contributions).
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05-19-2005, 03:13 AM | #8 |
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Join Date: Jan 2001
Location: Rennes, France
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So, what is the answer ? What is X ? Tell me, tell me !
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05-19-2005, 08:52 AM | #9 |
Head Coach
Join Date: Jul 2001
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If you're looking for a calculator online to do this for you:
http://www.fool.com/calcs/calculator...urce=LN#saving How much will my savings be worth is a good one. How much will it take to save for a vehicle, home, etc lets you put in an end goal. If you actually want the mathematical equation behind it... i'm not that smart anymore |
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