Current Events > Just put $175 into my Roth IRA, in 25 years it will be worth

(+) Yeah! (+)

$14,000

Stor

How do you plan on getting 20% annual return on your investment?

radical_rhino posted...

How do you plan on getting 20% annual return on your investment?

Could be compound interest.

Mistere_Man posted...

Could be compound interest.

Yes thats my point

radical_rhino posted...

Yes thats my point

I apologize I have no idea how any of these things work.

Doubtful. Particularly with inflation taken into account. You really have to beat 7% to even break even with inflation at 7%, for instance.

I have $500 auto-deposited into my Roth IRA every month, and then Ill manually put in $1000 or whatever makes up the difference manually when I get my tax return or some other time, so I hit the max each year. But I dont expect that thing to grow 200% or whatever.

PraetorXyn posted...

Doubtful. Particularly with inflation taken into account. You really have to beat 7% to even break even with inflation at 7%, for instance.

I have $500 auto-deposited into my Roth IRA every month, and then Ill manually put in $1000 or whatever makes up the difference manually when I get my tax return or some other time, so I hit the max each year. But I dont expect that thing to grow 200% or whatever.

When you look at people estimating annual S&P500 returns you'll see numbers between 7%-12%. Depending on the specific timeframe you pick. And the low side of 7% factors in inflation. So yes roughly 7% is safely your expected "real returns".

As much as inflation is talked about now, it's usually more like 3% or less each year. The federal government targets 2%.

What will $14,000 be worth in 25 years?

ai123 posted...

What will $14,000 be worth in 25 years?

Tree fiddy

Kuuko posted...

When you look at people estimating annual S&P500 returns you'll see numbers between 7%-12%. Depending on the specific timeframe you pick. And the low side of 7% factors in inflation. So yes roughly 7% is safely your expected "real returns".

As much as inflation is talked about now, it's usually more like 3% or less each year. The federal government targets 2%.

Im more just talking about how money buys less over time rather than inflation as it currently works. For example, my parents took out about $34,000 in loans to build their house (which has 3 bedrooms, 2 bathrooms, and a full basement, all cinder block and brick on the outside, best insulated Ive seen) in 1988, and that probably wouldnt even come close to building a starter home now.

So its less about the money itself than it is what you can expect to buy with a given amount of money by the time you retire versus what you could buy with it now.

Roth IRA combined with a pension/401k/own savings and parents inheritance = (:

DDP886 posted...

Roth IRA combined with a pension/401k/own savings and parents inheritance = (:

You need to do better than that