A quick post to update with the answer to last Thursday’s question:

How long will it take to achieve a $75,000 portfolio if I can save $1,000 per month and earn 7.5% per annum on my savings. Bonus points – if your marginal tax rate is 27.5% then how much longer do you have to save to achieve your goal?

• Future Value = $75,000
• PMT = $1,000 per month
• rate = 7.5% per annum or 0.625% per month (7.5 / 12)

Answer is 5 years and 2 months – you can find my workings in the google doc that I’ve created for this series.

+++

To calculate the bonus answer a simple solution is to “tax” the investment return using 73.5% (1 – tax rate) to get an annual rate of 5.4375% and a monthly rate of 0.453125%.

This extends the time required to achieve $75,000 by about three months.