Suppose you want to have $600,000 for retirement in 35 years. Your account earns 10% interest. How much would you need to deposit in the account each month? $


To determine how much you need to deposit each month to reach $600,000 in 35 years with an interest rate of 10%, we can use the future value of an annuity formula:

\[
FV = P \times \frac{(1 + r)^n - 1}{r}
\]

Where:
- $ FV $ is the future value ($600,000),
- $ P $ is the monthly deposit,
- $ r $ is the monthly interest rate (10% annual interest rate, so $ r = \frac{10\%}{12} = 0.00833 $),
- $ n $ is the total number of periods (35 years × 12 months = 420 months).

Rearranging the formula to solve for $ P $:

\[
P = \frac{FV \times r}{(1 + r)^n - 1}
\]

Now, let's plug in the values and calculate the monthly deposit.The monthly deposit you would need to make to reach $600,000 in 35 years with a 10% annual interest rate is approximately **$158.03**.

Would you like further details or clarifications on this? Here are some related questions to consider:

1. How would the monthly deposit change if the interest rate were higher or lower?
2. What if you had a shorter or longer time horizon (e.g., 30 or 40 years)?
3. How much total interest would you earn over the 35 years?
4. How would the outcome differ with different compounding periods (e.g., quarterly instead of monthly)?
5. How much would you need to start with today if you didn’t want to make monthly deposits?

**Tip:** The earlier you start saving, the more you benefit from compound interest, leading to lower monthly contributions.

Suppose you want to have $600,000 for retirement in 35 years. Your account earns 10% interest. How much would you need to deposit in the account each month?

Discover how to calculate the monthly deposit required to reach $600,000 for retirement in 35 years at a 10% annual interest rate. This example involves key financial concepts like the future value of annuities and compound interest. Suitable for advanced high school or college students.

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