I plan to open an IRA, what would be a good amount to start my account with?
Answers: Contribute as much as you can afford (up to your maximum of $4000 for 2007) before April 15 and you may still be able to claim it on your 2007 taxes. Make sure you indicate the contribution is for 2007 and it will be treated as though it was made on December 31 of 2007. If you want to make a contribution to your IRA before April 15, but not before you file your taxes, go ahead and include the contribution you plan on making.
After your first contribution, decide what you can afford annually (up to the max of $5000 for 2008), divide it by the remaining months in the year, and contribute that much each month.
Do whatever the maximum allowable amount is.
Good luck.
i agree with the other posters. the best amount is the maximum, which is $4000 for 2007 and $5000 for 2008.
so if you haven't done so already, you still have a chance to fund both your 07 and 08 by April 15th. after that you lose your 07 and can only do your 08 until next April 15th.
just make sure you explicitly designate whatever money you deposit for the particular year it is to be accounted for. a deposit made before April 15, 2008, will be designated as 08 unless you specify otherwise. i made a mistake like that once and it caused me a few accounting and paperwork headaches i didn't really need.
If I invest 20,000 in an account that earn interest 9% compounded monthly what is the value in three years?
Answers: If you found a savings account that pays 9%, let me know where! Haha. Sounds like homework.
Compound Interest Formula:
S = P(1+i)^n
Where
S = amount
P = principal
i = Interest rate per conversion period
n = total number of conversion periods
Example:
Alan invested $10,000 for five years at an interest rate of 7.5% compounded quarterly
P = $10,000
i = 0.075 / 4, or 0.01875
n = 4 * 5, or 20, conversion periods over the five years
Therefore, the amount, S, is:
S = $10,000(1 + 0.01875)^20
= $ 10,000 x 1.449948
= $14,499.48
So at the end of five years Alan would earn $ 4,499.48 ($14,499.48 - $10,000) as interest.
20k x 1.09x 1.09 x 1.09 = 25900.58
Bear in mind this is a very high return. Most banks would not offer more than around 6 percent.
It sounds too good to be true!
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