Hi I'm buddy broom tourney and real estate investor in Southern California I teach a personal finance class entitled calculate your way to financial freedom now in today's video we have Michael and his family and they want to know how long will take their investment to grow big enough for them to take their dream vacation now let's get started hello and welcome right now our situation we're dealing with is that Michael and his family want to go on vacation they've determined that the place they want to go to will cost them it's a nice little beach resort will cost them six thousand dollars total for the for the whole family to go on vacation right now they're starting off they have twelve hundred dollars in a vacation account that they can invest in addition they know that they can contribute 175 dollars per month into this account and.
They want to fit in and finally they know they can make their money worth it eight work at eight percent.
You want to figure out how long it's going to take them to get their ultimate goal you'll see in front of us is a is a tablet with an app the app is the equivalent of this. This is a hewlett-packard can be I I financial calculator and notice the buttons on here almost identical to water off featured on the app this app was created by innovative elements and outstanding app and I really enjoy using it and you'll notice we're gonna be using the top buttons up here n is for time period that's number of months I why are for interest rate BB is present value that's what they have today to start off with investing PMT are payments that's the monthly payments they can make FB is future value that's the ultimate goal that they want to have.
We're solving firenze.
We're going to skip over that we do know that they can make their money work at eight percent you put eight there plug that into the interest rate now TV we know that they're starting off with twelve hundred dollars today sort of put 1200 ever put negative we're going to put press end in the present value you put negative because even though it's it's under their control they're investing in.
They're losing ability to use it today.
So we put it as negative then we're going to put 175 as well that's going to be negative PMT because they're going investing that every month.
They're not going to be able to spend it while it's while it's growing while gaining interest and then finally we know that their ultimate goal is to have six thousand dollars to put six thousand and then the FV once we know these four figures we just have to press n we solve for the fit that means it will take them 24.25 months or just over 24 months or just over two years they invest twelve hundred dollars today and then $175 for every month thereafter and eight percent interest they'll be able to get six thousand dollars 24.25 months.
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