Wednesday, August 6, 2008

The Math

So what's five dollars a day worth? I'm 22, let's assume I save and invest five dollars a day, everyday, until I retire at 65, that's 43 years. Assuming an annual rate of return of 8% and 2.5% inflation and a marginal tax rate of 33%, I will have deposited $ 137 702.65 and my investment will have produced $ 313 111.06 in growth for a total value of 450 813.71. This all presumes that I increase my $5 per day savings with inflation also. I'll index my inflation to the previously mentioned Starbucks latte because I believe that if you can cut out a latte a day, you can try and follow along with me.

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