Question

Over the course of 34 years, you plan to accumulate 1 million and retire immediately after. You will save $751.7 every month into your investment account starting one month from now. . To achieve the goal in 34 years or sooner, your investment must earn monthly rate of return or higher.

Answer 1

The question pertains to calculating the required monthly rate of return to achieve 1 million dollars in savings for retirement in 34 years, demonstrating the impact of compound interest and consistent saving.

Step-by-step explanation:

The student's question involves calculating the required monthly rate of return to achieve a retirement savings goal of 1 million dollars in 34 years by saving $751.7 every month. To understand how savings can grow over time with compound interest, we can refer to examples that illustrate the benefits of starting to save early and the power of compound interest. For instance, if at age 25, a person saves $3,000 and puts it into an account with a 7% real annual rate of return, after 40 years, this initial amount will have grown to $44,923 due to compound interest. Similarly, saving consistently over the years will accumulate considerably more wealth. Achieving such a financial goal is a matter of understanding how much to save each month and the rate of return needed, clearly showing the importance of financial planning and investment knowledge.