How much should you deposit at the end of each month into an investment account that pays \( 9 \% \) compounded monthly to have \( \$ 1 \) million when you retire in 45 years? How much of the \( \$ 1 \) million comes from interest? Click the icon to view some finance formulas. In order to have \( \$ 1 \) million in 45 years, you should deposit \( \$ \square \) each month. (Round up to the nearest dollar.)
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To accumulate $1 million in 45 years with monthly deposits into an investment account that offers 9% interest compounded monthly, you would use the future value of an annuity formula. By plugging in the numbers, the calculation reveals that you need to deposit approximately $278 per month. Now, out of the total $1 million that you will have at retirement, about $149,377 comes from your monthly contributions, while the jaw-dropping rest, about $850,623, is pure interest earned through the magic of compounding! Keep in mind that the earlier you start investing, the more time your money has to grow!
