Question for the Money Doctors

Question submitted on Sep 13, 2021.

Question

How can I calculate 3 Million dollars compounding annually at 10% - while withdrawing 80% of the profits for personal use and letting the remaining 20% continue to compound and grow.

Answer

OK, if you are withdrawing 80% of the profits, then your compounding return is a net 2%.  You can use a financial calculator or spreadsheet to compound your return.  At 10 years your investment would be worth $3.7M, 20 years would be worth $4.5M.  

Not sure what investment would give you a guaranteed 10%.  To get that high of a return, you would have to invest in the stock market or investment of similar risk, which could incur some significant volatility.  That would have to be taken into consideration and planned for because your returns would not be even over your investment periods.  I would suggest you see a CPA investment advisor for help...visit www.aicpa.org/findacpapfs to find a personal financial specialist near you.

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