Date: Sat, 27 Nov 2004 17:34:54 CST
From: casteele95thbgheavy@yahoo.com (Christopher A. Steele)
Newsgroups: misc.invest.financial-plan
Subject: Re: Long-term Investment calculation
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	qY+zsgscqnENwwFrKJolSl0XHHA9Fg8R9gVQPGqm2H3tQ21rJGurtg==
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Mr. Meyer:

  Exactly what I was looking for! 
  Thank you ... VERY much.

Christopher A. Steele
casteele95thbgheavy@yahoorambler.com
[banish 'rambler' from above to Email]

Son of Col. Marvin J. Steele
  US Army Security Agency/Adj. Fts: Richardson, Devens, Rucker,
Lawton, Oakland Army Terminal, Thailand, Korea


Jesse Meyer  wrote in message news:...
> Christopher A. Steele  wrote:
> > How do I calculate how much needs to be invested in one lump sum ...
> > into a fairly conservative financial tool upon my death ... such that
> > it will produce an increase in capital sufficient to keep up with
> > inflation ... while allowing a consistent amount to be withdrawn every
> > month? ( I haven't decided on the type of instrument yet.)
> 
> If my math is correct:
> 
>     p1 = yearly inflation.
>     p2 = yearly return.
>     D  = money taken away each month.
>     M  = money invested.
> 
>     D * 1200  / ( p2 - p1 ) = M
> 
> If you figure 4% inflation a year, have returns of 6%/year, and want 
> $1k a month, you need to invest:
> 
>     1,000 * 1200 / ( 6 - 4 ) = $600k
> 
> That formula is easy to double check:
> 
>     $600k to invest @ 6%/year.
>     Inflation is 4%/year.
>     Effective return is 2%/year, which is the money you can withdraw
>     without decreasing the "real" value of the money.
>     That works out to $12k/year or $1k/month.
>     
> Hope that helps.


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