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If you invested ---- per month in mutual funds from age 25 to 65, you could have $3.6 million in a mutual fund.

A)$100
B)$500
C)$1,000
D)$5,000

User Oniqua
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1 Answer

2 votes

Final answer:

Without specific details about the return rate and whether contributions are to increase over time, it's not possible to say the exact monthly amount necessary to reach $3.6 million by investing in mutual funds from age 25 to 65. Regular contributions that leverage compound interest can accumulate a significant retirement fund, but a clear understanding of investment return rates is essential to determine precise figures.

Step-by-step explanation:

The question is asking how much would need to be invested monthly in mutual funds to accumulate $3.6 million by retirement at age 65, starting at age 25. To determine this, we need to consider the power of compound interest over a 40-year period. Based on an example given, a one-time investment of $3,000 grows to $44,923 with a 7% annual return after 40 years. While this example demonstrates the growth of a single investment, we're interested in the effect of regular monthly contributions over time.

Unfortunately, without more information such as the exact rate of return used, and whether contributions increase over time or remain constant, we cannot provide an exact answer to the exact monthly investment needed. However, we do know that starting to save early and investing consistently in a well-diversified stock portfolio can potentially accumulate a significant amount by retirement, as mutual funds can leverage the power of compound interest.

Achieving such a goal may require more than the one-time contribution in the example; it would necessitate periodic investments over the years, potentially increasing as income increases to adjust for inflation and other factors. Only comprehensive financial planning with a clear understanding of investment return rates will reveal the precise amount to invest monthly to reach $3.6 million.

User Tom Anderson
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