The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/2nd-and-the-one-that-i-am-trying-to-find-a-16886941.aspx

Subject:  Re: Formula to Calculate Growth Date:  3/13/2002  4:53 AM
Author:  ptheland Number:  33986 of 76078

2nd) (and the one that I am trying to find a formula for) Suppose that I start an IRA with an initial investment of $1000 and every year I add $3000 more to it. What formula can I use to determine how much the IRA will be worth in a certain number of years given an expected rate of return.

You're looking for the future value of an annuity, which gets a little messier. One formula is:

((1+r)^n) - 1
-------------
r

where r is the expected rate of return (per period) and n is the number of periods.

That will work for the $3000 annual additions. Then you'll need to add in the value of your initial contribution of $1000 figured from the formula given to you earlier.

--Peter
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us