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Homework answers / question archive / You just attended a workshop organised by Warren Buffet, a business tycoon and considered one of the most successful stock market investors
You just attended a workshop organised by Warren Buffet, a business tycoon and considered one of the most successful stock market investors.He lectured you on how to play in the stock market and make millions. You decide that you want to become a millionaire by the time you are 45. You now believe that you can beat the market and can earn about 14.1per cent per annum from investing in equities. You have just turned 21 and you decide to play the stock market. How much do you need to invest quarterlyto achieve your goal of £10,000,000?
The amount to be invested per quarter can be calculated using PMT function in excel
The inputs will be
Rate = 14.1/4 = 3.6% (quarterly rate since investment is calculated per quarter)
nper = number of quarters = (45-21) years * 4
nper = 24*4 = 96
PV = 0 (no initial lumpsum investment)
FV = 10,000,000 (amount at the end of 45 years)
The investment required per quarter is calculated to be 12,490.47. This amount is negative in excel as it is the cash outflow, while FV is cash inflow
please see the attached file for complete solution
