Roth IRA calculation... a bit off?

Are sure that's not just an example? There's no financial institution on the planet that should give you numbers like that under the implication that such a return is guaranteed or even plausible, something is amiss...

I'm just guessing, but it's not bad math, it's outlandish return rates. You got a link or anything?

Exactly, those are Money Market accounts and the returns are:

0.15%
0.25%
0.50%

Emphasis on the decimal, point 5% or half a percent is not the same as 50% or fifty percent. Sorry to crash your party, tho...

Also, an IRA Money Market Account is very different from a Roth IRA; I'd read a bit more about those.

It says .50% not 50%. That's where your error is. But if those were the rates I would be all over that haha.

You can hold money market instruments in a Roth IRA, but they are different animals. Google can help you much better than I can:

http://www.google.com/search?q=roth+...ient=firefox-a

Results 1 - 10 of about 407,000 for roth ira vs money market account. (0.31 seconds)

It wouldn't hurt to learn the difference between a traditional and Roth IRA, too.

No reason for you to use a roth mutual fund at 23. Look into mutual funds or non leveraged ETFs under a Roth account.

Meant to say no reason to use a money market fund... Look into mutual funds.

ETFs are basically the same as mutual funds. Just stay away from the leveraged ones those are the ones that decay over time.

One main difference between an ETF and a mutual fund is when you put money in an ETF you are charged a commission each time. Most mutual funds will not charge you. So if you are planning to add to it over time a mutual fund will be a better choice.

With a mutual fund you can select from several different funds. There are some that invest in money market, bonds, stocks, or even a combination depending on how much risk you want.

Yea the commission is exactly the same as when you buy a stock. There is also the expense ratio. But that fee is taken out of the money invested in the fund exactly the same as mutual fund expense ratios. Nothing extra you need to pay it's automatic.


That is probably just a coincidence. Some new mutual funds may have a way to "beat the market" which only work under present conditions. When those conditions change the next year so do their profits. Picking a mutual fund is really tough because their are so many out there. Try narrowing them down by finding only no load fund (no fee to buy or sell) with low expense ratios.

Most online calculators for the future value of an annuity are very basic and don't allow you to enter accurate data... such as monthly interest.

Use the Future Value (FV) function in excel.

If we want to calculate how much $100 a month earning 10% annual interest, we want to figure out the monthly interest rate, so in excel it works like this:

1) go to functions and select the tab for financial and double click "FV"

Rate: (0.10/12) this breaks down an annual interest rate into a monthly compounding one since we are dividing by twelve months

NPER: 10*12=120 monthly payments for ten years

PMT: the equation requires a negative number so enter -100 for one-hundred dollar pmts per month.

PV: this is the present value. I.E. if you want to compound existing money in your account. If your account has zero and you'll only be contributing the 100 per month, leave this blank and you should come up with:

$20,484.50

Now lets say you had ten-thousand dollars in your account that would also be earning 10% annual interest compounded monthly. For the PV in the formula enter -10000

you should come up with the following:

$47554.91

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Using excel allows you to be more flexible with your terms i.e. quarterly interest (0.10/4) etc etc