Ana has started working and is going to start saving right away for her retirement. She has examined her budget and she can put away $550/month. Additionally, she believes that she is able to to make her money work at 6% interest. Assuming that Ana starts with nothing today and she continues on this same payment plan until she retires in 40 years, how much will she have in her "nest egg" when she finally retires?
Answer: (To solve this challenge, enter the following key strokes into your 10bii financial calculator.)
N = 480 (the number of months in 40 years)
I = 6 (this is the interest that Ana believes she can earn)
PV = 0 (Ana is starting with nothing)
PMT = (550) (this is the amount that she plans on investing every month. Notice that it is a negative number because it is "leaving" her pocket every month into her retirement fund.)
FV = ?? (This is what she is solving)
After entering in the numbers and solving for FV, we find that her "nest egg" will be $1,095,319.90 in 40 years.