the math is really off in this cnbc (and acorns) article regarding compounding interest

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arcticpineapplecorp.
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Joined: Tue Mar 06, 2012 8:22 pm

the math is really off in this cnbc (and acorns) article regarding compounding interest

Post by arcticpineapplecorp. »

this clickbait article asked how much would you have for retirement if you saved $100 a week in your 401k:
https://www.cnbc.com/2021/06/08/you-don ... ement.html

the assumptions are:
1. you will start investing in your 401(k) at age 22
2. your investments will earn 6% in returns (really bad writing, should have at least said "annually")
3. you plan to retire at 67.

the calculation may be slightly different if you look at weekly contributions rather than annual, but the video says you invest $5200 a year ($100 a week). It doesn't say how many years, but aren't we assuming from 22-67 is 45 years??

a future value calculation showing a yearly investment of $5200 for 45 years earning 6%:
=FV(.06,45,-5200)

yields $1,106.266.27.

even doing a weekly calculation like:
=FV(.06/52,45*52,-100)

would have yielded $1,200,904.42.

But the cnbc article (+acorns) says you'd only have $654,100.

Can cnbc's math be so far off??
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Normchad
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Joined: Thu Mar 03, 2011 6:20 am

Re: the math is really off in this cnbc (and acorns) article regarding compounding interest

Post by Normchad »

I tried a random online calculator and came up with 1.13M after 45 years.... so I agree with you....

There are a ton of media outlets out there. And they have to keep cranking out content to drive traffic and get ad sales.

A lot of people making this content have no idea what they are talking about. None. Zero. They aren’t all journalists or have subject matter expertise.....
hi_there
Posts: 1182
Joined: Sat Aug 29, 2020 7:00 pm

Re: the math is really off in this cnbc (and acorns) article regarding compounding interest

Post by hi_there »

Well, they did get you to repost their link here for people to click... So, mission accomplished??
Flyer24
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Re: the math is really off in this cnbc (and acorns) article regarding compounding interest

Post by Flyer24 »

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