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Investing/Strategies / Retirement Investing
|Subject: Re: Pension figured into Networth???||Date: 10/14/1999 9:30 AM|
|Author: Helter||Number: 14519 of 81567|
Just one comment on this:
Getting 1% per month is better than getting 12% per year.
1.01 to the 12th power i.e. compound interest =
1.126825 or over 12.5% per year.
If you are compounding over a long period of years - that 1/2 % can really add up.
1000 for 30 years at 12% per year = 29,959.92
1000 for 30 years at 1% per month = 35,949.64
So for each $1,000 in your calculation - you get a difference 30 years out of about $5,000
so rather than dividing your yearly interest rate by 12 to get monthly - take the 12th root of 1+the interest rate. In excel that's
=1.12^(1/12) which comes out at 1.009489 so
.9489% per month is 12% per year.
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