$250,000 inheritance. If she invests her money in a diversified equity portfolio returning 8 percent per year, approximately how long will it take her to become a millionaire?

Answer 1

So, we may actually use the FV formula in this scenario to find how long it will be.

FV = PV × (1+r)^t

FV ⁄ PV = (1+r)^t

ln(FV ⁄ PV) = t × ln(1+r)

t = ln(FV ⁄ PV) ⁄ ln(1+r)

t = ln($1,000,000 ⁄ $250,000) ⁄ ln(1+.08)

t ≅ 18.01 years