The required cash on hand to be invested

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Reference no: EM131953069

Goal is to have $1,000,000 in 20 years in an investment account which will be available for me to start with drawing in the 21st year. There are multiple options. Which option is preferable and why?

Assuming that I have the required cash on hand to be invested.

Option #1: Put aside lump sum today, at 8% interest compounded annually.

Option #2: Invest specific amount over time (over next 18 years) at 10% compounded annually.

Option #3: Put aside a lump sum today, at 8% interest compounded annually for 10 years, at which point the account balance in the 10th year reinvests in another account over next 10 years (specific amount for this account is withdrawn and reinvested in another account every year) at 10% interest compounded annually. The first account stops earning interest at the end of 10th year.

Reference no: EM131953069

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