The first thing to do is to use the fisher rule, which implies:
(1+R)= (1+r)*(1+h); h being inflation.
So, (1+0.09939)= (1+r)* (1+0.032)
(1+r)= (1.09939)/(1.032)
r= 1- 1.0653= 6.53%
Take you Financial calculator and put the following order:
I/Y= 6.53
N=43
FV= 2,000,000
PV=0
CPT+PMT= 9,209.68
You want to have $2million in real dollars in an account when you retire in 43 years. The nominal return on your investment in 9.939% and the inflation rate is 3.2%. What is the real amount you must deposit each year to achieve this goal?
1 answer