If I invest $600 every year for 30 years, and receive 10% interest, what is the final sum?

Question

Also, what is the formula for figuring interest over a # of years - how did you come up with the answer to my question?

Answer 1

$108,566.05 would be your total.

Cannot give you the formula, but here is a " calculator" if you want to "play around" with some different amounts or different return percentages or time frames.

http://www.finishrich.com/free_resources...

Answer 2

This is relatively easy to figure out using the functions tool in an Excel spreadsheet.  You have to make certain assumptions, and in this case I specified you would be putting in the entire $600 at the start of each year.  After 30 years you would have $108,566.  If you wait until the end of the year before making the investment, you end up with $98,697.  Obviously if you make the investment in small amounts through the year, you'll get some variation between these two figures.

Go to the functions (Fx) button in the toolbar, then select future value (FV).  Plug in your values in the formula box.

I have to say that this however is very simplified and assumes a consistent rate of return every year.  The market in reality fluctuates widely, although the average over time is about 10%.