Waiting period. Susan Norman seeks your financial advice. She wants to know how

Question

Waiting period. Susan Norman seeks your financial advice. She wants to know how long it will take her to become a millionaire. She tells you that she has $1,524 today and wants to invest it in an aggressive stock portfolio. The historical return on this type of investment is 20% per year. How long will she have to wait if the $1,524 is the only amount she invests and she never withdraws from the market until she reaches her $1 million? (Assume no taxes on the earnings) What if the rate is on 14% annually? What if the rate of return is only 9% annually?

Explanation / Answer

a) when return is 20 % then time = 35.57 years

b) when return is 14 % then time = 49.5 years

c) when return is 20 % then time = 75.26 years

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