Final answer:
To determine your yearly savings for retirement, divide the total amount needed by the number of years you will be working.
Step-by-step explanation:
To achieve the goal of RM2 million at retirement with an average annual interest rate of 12% over 30 years, the student would need to use a financial formula for calculating the future value of a series of annual investments, commonly known as an annuity. The future value annuity formula is FV = P × [((1 + r)^n - 1) / r], where FV is the future value, P is the annual payment, r is the interest rate per period, and n is the number of periods.
Breaking down the problem:
Future Value (FV) required: RM2 million
Annual Interest (r): 12% or 0.12
Number of Years (n): 30
Using the given information, we rearrange the formula to solve for P (annual payment) which will be the amount needed to save annually for 30 years.
To determine your yearly savings, you need to divide the total amount you need for retirement (RM2 million) by the number of years you will be working (30 years). So, the yearly savings would be RM2 million divided by 30, which equals RM66,667.