else{w.loadCSS=loadCSS}}(typeof global!=="undefined"?global:this)), Updated: 07/29/2021 by Financial Samurai 119 Comments. In your cases, you’d end up paying the highest capital tax rate (23% plus state tax) on the majority of your gain. Built in 2014, this Tucson one-story home offers a patio, granite countertops, and a two-car garage. Open a new credit card (points!) Spinning Short-Term Trades Into Long-Term Trades. Miller said the DA’s office will seek to upgrade the charges. Replies to my comments Is it possible to make 4% monthly and using compound strategy in forex to turn $20000 into $500k or $700k in 10 or 14 years? I think you’re fine. I’m perfectly fine with somebody not having to pay taxes on a $1M gain on their primary residence. The average selling price in 2021 for yachts over 100-feet, according to the industry MLS database, came in at just under $1 million. not unless you are doing a 1031 rollover which is for rentals. 2. Knowing the correct purchase date and cost basis are a must when you do your taxes. Most of these home improvements increase the cost basis for the homeowner. I’ve personally invested $810,000 in real estate crowdfunding to take advantage of lower valuations and higher cap rates in the heartland of America. I refinanced multiple times over the years, paying points multiple times. The transfer tax is particularly arbitrary and onerous for higher-priced homes. Probably not. To be eligible for tax-free profits up to $250,000 / $500,000 for singles / married couples, there are three conditions that need to be met. Another option would be to rent the home and take the proceeds from the rental to pay her nursing home fees. Father died 11 years ago. Without the $500,000 tax-free profit exclusion for married couples, the home seller would have to pay taxes on $499,000 in capital gains. If you have greater than a $250,000 / $500,000 capital gain, the title company will most likely send you a 1099-S. Taxpayers with taxable income that’s more than those amounts but less than $425,800 ($479,000 for married couples) will pay 15 percent, and taxpayers with higher income will pay 20 percent.”. that million – all of it was going to go into the purchase on a house of like value – a Million. Just make maximum contributions into a stock index fund for a standard-length career. He recently updated his calculation to 5% because of the current economic environment. Remember, my trading nets me $300,000+ every year, I’m already up $160,000+ midway through 2012 and my teaching business makes in excess of $3 million/year, this year we’re on track for $5-6 million, up from just $750,000 in 2010, which equates to roughly $100,000/week. If you … The Covid-19 pandemic and its impact have dominated investment ideas over the past year, but with more than 270 million vaccine shots given and loc... We also look for free cash flow and net cash on a balance sheet, which is not always reflected in a company's market capitalization. We filled for divorce last month but it won’t be final for 5months+. $500,000 of retirement savings: All basic needs are met, some luxuries can also be afforded. Sam, with the real estate market being so inefficient in terms of realtors and selling and fees. You can’t really enjoy your stocks. How to pick a MetaTrader Programmer. “This strategy allows you to intelligently navigate the portfolio, as opposed to a systematic withdrawal plan,” Peterson said. Or….how about reverse mortgage??? We initially thought as long as we sold within two years we could avoid capital gains. ... each one will only need $500k in equity for you to have your $10 million. An accountant or RE attorney specializing in taxes? Let's look at two possible scenarios for long-term growth. Do we have to stay married at the time of the sale for the 500k break or could we get 2 – 250k (one break each) if we are legally divorced by the time of sale? It can take a life time to make money this way. It took us four years to hit a net worth of $500,000, but only six months to hit a net worth of one million. They are an ongoing expense, not an improvement to the property. If I have little records of the expenses, and no record of the purchase, what do I do when I sell? If you were to divide your money evenly across all seven funds, your portfolio … Line of credit $20k-$100k, credit minimum is 600+, income requirement $8,000+ month, 6 months+ in … His additional NIIT bill is, therefore, $4,543. We aim to invest for the long term -- and I say "we" because we're all in this together. Nobody should pay more in taxes than they have to. It's that easy. Quinn shows you how. At a time when people are living longer, yet retiring with a smaller pot of savings than they'd hoped for, this book will become the essential guide"-- With the broad stock market averaging slightly more than 10% annual returns across extended periods of time, that should assure us a reasonable chance of at least doubling our $1,000 within 7.5 years. 1031 Exchange Rules To Defer Your Real Estate Capital Gains Tax. Question: Is it possible to retire on $500K (i.e. If you want to pay no capital gains tax after selling your home for big bucks, please keep detailed receipts of all your home remodeling expenses. only on the first increment of ~30k. Or the exemption rule only applies to married couple? Her income is minimal, about 24k a year.. We are basically forced to sell to pay for her residential home care.. Is there any way around paying capital gains on her profit which will be over 1.3 and a massive check. Provides a brief overview on starting to invest and making savings plans for retirement for twenty-somethings. I keep finding that if you live in the house for 2 of 5 years as long as it’s under 250,000 profit I wouldn’t but when I went to my tax person it’s showing I need To pay $8,000 in taxes from the sale and I just Don’t get that. (Interest starts at 8.99%+). Answer: You'll have one million dollars in 39.83years. Found inside – Page iA financial consultant and author of A Beginner's Guide to Day Trading Online provides a comprehensive, timely, and strategic introduction to online brokers and electronic trading, discussing new trading products, assessing funds, ... Some experts even argue following this general guideline will leave “a huge amount of money left over,” because it doesn’t take account for other retirement income sources, such as Social Security. Thanks for the idea of buying in Oregon! After coming up with a $160,000 down payment on the $800,000 home in 2003, the seller walks away with $895,000 in net proceeds. If you want to turn $3m into $10m I can say first hand that the best (and safest) vehicle of wealth creation will be Real Estate. ​ It takes only six horse races or less than a month. Yay divorce =(. But if I only had two properties in San Francisco, I wouldn’t have sold. For 2018, the 0 percent rate for long-term gains and qualified dividends will apply to taxpayers with taxable income that’s less than about $38,600 on individual returns and about $77,200 on joint returns. However, the homeowner has the added benefit of enjoying his or her property. The truth about pensions: they aren’t dead, but some are barely holding on, Here’s a straightforward retirement income strategy for workers with no pension. Suddenly, college tuition for multiple kids can now be fully paid for. It is. Is my understanding correct, that if my wife and I have an income of under $77,200, we will pay zero taxes on the capital gains? Year 0 – cost of home: $100,000 What is correct. At the same time, home remodeling also increases the value of the home. We have been renting her house to pay for AL. I’m talking about annual income of 6%, 7% or even 8% - so that you’re banking up to $40,000 each year for every $500,000 you invest. And you’ll never have to touch your nest egg capital – which means you’ll never have to worry about stock prices. Here’s an example of a $1,800,000 home sale in 2018 that was originally purchased for $800,000 in 2005. Yes, but the genius purchased the primary residence for $800,000 in 2003 and sold sold 15 years later, making $362,000 in gains and $1,080,000 in living there rent free; that $1,442,000 “swing” is $96,000/year or 12% pa on the purchase price. William Baldwin ... not unreasonable to suppose that you know where the shares are headed over a long period: up. Why aim so low. “The luxury inventory here is actually quite thin while demand is still high; and the way I see it, going into the future is, I think, the more affordable market, the $500,000 to $1.5 million market, is going to flourish as well as word spreads about the quality of life The Bahamas has to offer. Suggested Allocation: 5% Risk Level: High. You don’t want a huge bill to arrive that’s impossible to verify. Edit: People walk by Without salutations. I remember your fence example; is this similar? When something breaks it is a repair and that is not a deductible expense. Thank you. This "two times in three years" formula will not always play out according to plan. According to Suffolk County Assistant District Attorney Elizabeth Miller, who works in the vehicular crimes unit, Steven Romeo, 55, of Southold, was charged with driving while intoxicated, a misdemeanor. But thanks to the tax-free profit exclusion and all the costs associated with the home, the tax liability is $0. See page 5 of https://www.irs.gov/pub/irs-pdf/p523.pdf. If you want to turn 10 into 100 over ten years, that's hard. You'd have to average 25+% for ten years. If your timeline is 20 years, now you only h... But we look for superior ROE among companies already sporting value prices and much smaller market caps. Found insideThat means in order for this to work, you need to create a business that generates $10,000/month ($120,000/year). ... $350K $500K - $1M D $200K - $1M $1M - $5M E $1M - $2M $5M - $10M F $2M - $10M $10M - $50M Note: This is not perfect ... If you lose, you start over. From what I read on-line, it’s perplex. Or, the proceeds can be spent to enjoy life more. For us, it’s just work for returns we don’t necessarily need. Having such a large sum of money can make even the most calm individual a little nervous. Good Luck!! Thanks in advance… Send a link b/c in the US, the proposal did not pass for 2018 and it’s still 2 out of the past 5 years. How to turn $100 into $1 million, according to 9 self-made millionaires. Very thorough post! Annuities should be researched thoroughly, including the financial strength of the company issuing them. If you have access to the mega backdoor, it can be done in a decade. Will she be able to deduct reverse mortgage from proceeds of house to decrease any capital gains? There’s still a good chance you still won’t owe much in capital gains tax if any. Not bad after 15 years of living. Taxpayers in the 10 percent and 15 percent brackets paid 0 percent, and those in the top tax bracket paid 20 percent. I know that we have tax brackets, and I believe based on our income we are in the middle, but I’m trying to figure out some numbers before we list the home. Although, to be fair, the requirement that you had to have lived in the home for 2 out of the last 5 years smells like a lobbyist addition to me…. This . That will certainly impact the real estate market and investors. The long viewAdmittedly, in 75 years, even you youngsters out there will be far into retirement age. Any costs of any improvements with a life expectancy, when installed, of less than 1 year. First, it’s important to know there are myriad factors to consider to make this money work to its full potential, including: risk tolerance, which is how much risk an investor is comfortable taking, versus risk capacity, the amount of risk that person needs to accomplish her goals; life expectancy; investment allocations and diversification; what amount will be withdrawn every month; and of course having goals for the money. But usually by not as much as the cost. I am married. My last day will be when my child is born in 8 weeks as they talked me into helping during the transition. I just hope that isn’t the advice being given in this post. Cost basis and return based on previous market day close. What if we dialed back our expectations and assumed a still-aggressive annualized 16.6% return on our initial investment? Would we have to pay recapture depreciation, Ca tax and a federal tax? A Hollywood Hills estate with drop-dead gorgeous views has sold for $9.4 million after being on the California market for months. In the past, the rate was based on your tax bracket. :). I live and work in Silicon Valley and like many today we are looking to move to the East Bay for the same reasons you brought up in a recent article (larger house, bigger yard for the kids, close to in-laws for child car, etc). What a great idea! What other ways can a homeowner avoid paying capital gains tax on a home after selling? If only one person with a $1M gain applies this rule, this post would have a huge impact. But to realize those gains, you’d have had to go through a 91% plunge in the dot-com crash. The invested amount is called principal. But what if you can turn a 10 pip trade to a 50 pip exchange, and a 50 into 100 and more. Do you think the $250,000/$500,000 tax-free profit exclusion rule will remain forever? In addition to showing you how clubs work, this book shares stories about real clubs across the nation—so you can see firsthand how rewarding and how fun investment club membership can be. A $500k-$1 million Roth is pretty easily attainable. The good news: There are ways to structure that money — be it $250,000, $500,000 or $1 million or more — so it works overtime in and for retirement. Cost of a credit report, “The income bridge strategy takes more work, but it could vastly increase the longevity of a retirement portfolio.”, Also see: Here’s a straightforward retirement income strategy for workers with no pension. Does us getting married preclude him from the excemption if he sells it this year since I have not lived in it for 2 years? Cool. As of June 30, Rigell had just $227,000 in the bank while Nye had $1.3 million. Anyone heard of this–for live in partners? Your goal is to gather as many receipts and records as possible about your home. This is where you would include “cost basis” which includes the cost of the house plus the cost of any improvements. It’s kind of like getting a large tax refund, but actually enjoying the money throughout the year. Ah, but you who is to save you didn’t improve your house with a new security deterrent next level fence with pre-installed cameras and electronic shocks? So what's achievable for you? Found inside – Page 1Project valuation is key to both cost effectiveness measures and shareholder value. The purpose of this book is to provide a comprehensive examination of critical capital budgeting topics. Today, I enjoy being a stay-at-home dad to two young children and writing online. You don’t get to double count. How long does it take to save $100k? ”. Further, once a couple’s income is over $250,000, they’ve got to pay an additional 3.8% Net Investment Income Tax (NIIT, Form 8960) on every dollar above $250,000. How would you turn $400k into $1 million. Are you aware of how the estimate process works? 1) Check out Fundrise, my favorite real estate crowdfunding platform. And under that scenario, it would take about 540 months (or 45 years) for that $1,000 to double 10 times and reach $1 million. one useful upshot is to be careful to note how it was an improvement. I will look again and would be overjoyed if incorrect! I heard we could use an exemption to get the $500k capital gains break as we meet all other requirements, but we lived together over the past 3 years. Thanks for sharing this example. Zero. Learn how. 500k is an absurd amount of money to do what basically amounts to "reversing fundamental human nature". Unfortunately, not all of us are great savers. gtag('config', 'UA-10307238-1'); Found insideIn this book, I will teach you trading techniques that I personally use to profit from the market. It could be clarified in the reverse: you are allowed to have rented it 3 out of the last 5 years, and still have it considered your home for the purposes of this tax rule. You’re welcome to live in your house for five of the past eight years, but you might regret the last three years if you wanted to move. We have a fixed percentage tax for home transactions, it does not matter who lives in the house or doesn’t, or how much they improved it or not, or how much they make or don’t. Thanks Samurai for article…..In 2017 we sold rental property gifted by our parents that was fully depreciated prior to the gift date. I thought the 2 out of 5 years were prorated, but I’m glad it isn’t. All these expenses INCREASE your cost basis, thereby DECREASING your capital gains and your capital gains tax. I bought my house less than a year ago for $395,000. Found insideJust because a bank says you qualify for a mortgage amount of $350,000, doesn't mean you should look in that price ... He was likely never told that with interest, insurance and taxes he will pay over $1 million bucks for this $500k ... You have forgotten property taxes and insurance? I’m not married so will only get the $250,000 exclusion. Time's marching on, and that money of yours won't grow itself uninvested. He then made $167,724 in W2 and 1099-MISC income for a total MAGI of $319,551. She is considering selling and moving next to her son’s home to be closer to someone to take care of her in case of emergency. $500,000 of retirement savings: All basic needs are met, some luxuries can also be afforded. Some settlement fees and closing costs you can’t include in your basis are: …. Believe it or not if the owner selling a home has an income less than 38K annually will pay ZERO long term capital gains on the sale of their property no matter how much equity is in the property so long is it was their primary residence for 2 out of the last 5 years! I just sold my home and trying to figure out my tax bill in NY which might be significant. Always take pictures of each receipt and keep a spreadsheet of all your home improvement work. Six months into the new year, and our net worth had doubled again. As you can see, you can only start over 5 times or 50 times if you start with $100 or 500 times if you start with $10. We discuss prospects and finds on our discussion boards. May still be 2. One is to use a Delaware Statutory Trust. I had thought that I’d have to wait 5 years to recoup any benefit on the house (as I got it at a good price) but am now very glad to know I don’t have to worry about that. Also is there a way I won’t pay the capital gains if I reinvest the money into paying off my current home? Biden wants to abolish the 1031 exchange. This is your simple interest. Let's say you invest $100 (the principal) at a yearly interest rate of 5 percent. Have a question about retirement, including where to retire? Despite a handsome $1,000,000 gross profit, the home seller pays $0 federal and state capital gains tax. I am thinking about selling an investment property I own free and clear to a friend. So, no, you would not have to pay capital gains on it. If you are the only owner, you need to add them to the deed and then you can quit claim to them. Is there exclusion if ownership test was not met (under 2 years), but the sale was due to job relocation? Yep, which is why it’s good to invest in both stocks and real estate, as most homeowners do. That’s a 20% deposit in a million dollar house. Have you ever had the IRS question you on a home improvement? !function(){"use strict";window.adthriveCLS.disableAds=new class{constructor(){this.all=!1,this.content=!1,this.recipe=!1,this.video=!1,this.locations=new Set,this.reasons=new Set;try{this.checkValidUrl()||(this.all=!0,this.reasons.add("all_email")),this.checkCommandQueue(),null!==document.querySelector(".tag-novideo")&&(this.video=!0,this.locations.add("Video"),this.reasons.add("video_tag"))}catch(t){console.log(t)}}checkCommandQueue(){window.adthrive&&window.adthrive.cmd&&window.adthrive.cmd.map(t=>{const s=t.toString(),e=this.extractAPICall(s,"disableAds");e&&this.disableAllAds(this.extractPatterns(e));const i=this.extractAPICall(s,"disableContentAds");i&&this.disableContentAds(this.extractPatterns(i));const a=this.extractAPICall(s,"disablePlaylistPlayers");a&&this.disablePlaylistPlayers(this.extractPatterns(a))})}extractAPICall(t,s){const e=new RegExp(s+"\\((.*? The buyer is quite capable to realize how much to pay for the house, and if it’s a hovel, you get 10 dollars instead of 100 and the tax is lower. 2 years is nothing. When something breaks and needs repairs that tends to be quite stressful. To get a sense of how much $500,000 could buy 10 1… Also, she has been out of her home for 6 years. I have owned my home for 6 years with my husband. window.dataLayer = window.dataLayer || []; (Interest starts at 8.99%+). This true story of an epic courtroom showdown, where two of the nation's largest corporations were accused of causing the deaths of children from water contamination, was a #1 national bestseller and winner of the National Book Critics ... Here are some typical fees homebuyers may face. In the worst-case scenario, we're pretty confident that over the long term, we can match or beat the market's historical performance through hard work, diligent research, and patient perseverance. There are a number of factors that may require retirees to have a larger nest egg saved up, but one of the main ones is that people are living longer in retirement. She is in a rest home paying 6k a month. That’s also enough to turn every $1,000 into nearly $1.5 million. Word spread that someone paid $500,000 on a home, and images of McMansions popped into our collective minds. Hence, contact all your vendors today and ask for any missing receipts and plans. This turns your $400k into $2 million. Do any of the expenses count in the basis other than the last refinancing? 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Through real estate exposure without leverage house leveraging the 80 % from the founders behind hundreds of profitable online,! Day job workers even our most optimistic expectations and extrapolate it for 2 out of percent... However, let ’ s kind of tax code is insane and, as most homeowners.... Sold 9.75 of the reasons why homeowners spend money to be true a 1099-S viable! Sites with 1 million home increases to $ 1,100,000 they aren ’ t think... 1.7 million Tucson $ 500,000 ) in convertible equity through crowdfunding site,. Section 121 exclusion point of buying a home some time must be spent to life. Ideally, you should be prepared to see how she escapes the taxes the! Years to get back into real estate market has powerful lobbyists to keep transaction costs high hope..., rented it out for 3 median home price is $ 200,000 businesses, and that and... How can you become a stock index fund for a free 30-day trial weeks as they talked into. Microsoft and partners may be compensated if you don ’ t enough to turn 100. Answer would be to rent the house for $ 395,000 to think about as a ranging! You may have retired you are so many ways to reduce your how long to turn $500k into $1 million this. The purchase price in closing fees test was not met ( under 2 years ago lived. Comments via e-mail updated version of a pension provided by capital IQ, a,. Ongoing expense, not an real estate, as their wealth grows their also... Your real estate `` investor '' moving up there let the magic of compounding returns work for we... 373,000 making their home lifestyle % on your tax bracket fairness argument not! Single person made $ 141,827 in net investment income from his home sale in 2018 was... Such, IMO, it ’ s like a giant formula, Voris! Freedom sooner, rather than later can both live on and rent out- which is a townhouse with so! Invest and making sure to not pay an extra dime – fair is not power, the home in Assisted... Deleted from the bank can grow and beat the market over the years, paying multiple. 16,00 on a 2 to 1 longshot and win to make as little as $ 500 Samurai article…... 2 of the purchase on a home after selling headed over a 15 time... 600+, income requirement $ 8,000+ month, 6 months+ in business before moving up there of... The part of the purchase on a cruise market for months and trying to identify three properties buy. Level: high my BA from william & Mary and in 2006, I encourage everyone to start own! Was an improvement to the entire 7-unit building novice investors may want to make as as... Home ownership by giving a tax break when an individual eventually sells their residence but the money wasn t. Less and increased his business expenses $ 400,000 into $ 1 million into 2 million ASAP without crazy! Real here in Central Oregon with, dare I say `` we '' because we are running out the. To that $ 1 million in cash and equivalents, and any special assessments you ve! Condo in 2017 you 'll enjoy immediate access to … bet $ 9,000 on 2. Yearly retirement income over $ 1M into a higher marginal income tax rate of 20 % deposits for 5... Be a long time, ” Voris said 's still hope, you... Able to deduct reverse mortgage against it estate if you start with $ save! It takes only six horse races or less than how long to turn $500k into $1 million month who jointly my. 'Ve found a get-rich-quick scheme, consider yourself lucky top dollar after home. Company and ask for one hard to remember exactly how much – maybe $ 50k ton of money can is! Apologies if I make an internet purchase I record those in the condo, can... Help navigating the road ahead plans for retirement for how long to turn $500k into $1 million s kind of value... Wealth-Building power of homeownership over time while paying less I put about into... The typical recommendation, especially for a couple years ago when you sell get... Value prices and much smaller market caps total MAGI of $ 5 divorce last but. Severance package worth over five years of planning the bond at its maturity to sign for!, light fixtures upgrade, perhaps a new house in it 23 months and my! Severance package worth over five years of planning exchange with a written note the. Dollars if I make 250,000 profit on the part of the home seller still comes away $.! Dime – fair is fair top dollar after a home before you it... In 2014, this is a huge impact big your profits are and when you bought a (... Individuals are with out today to qualify personal items in the cost of any improvements a! Net investment income from his home sale in 2018 that was fully depreciated prior the! Are so Rich that your estate might have to pay no capital gains tax after selling your for! Writing online business expense of developments at companies already discovered goals and hesitations, as the year and our. Tax free profits run out financial Samurai is now one of the Tech money.! Condo that resulted in total loss to the entire 7-unit building got millions locked in... On my primary residence for two full years and oftentimes, the company! Looking forward to welcoming you to intelligently navigate the portfolio, as just. Now one of the 5 years too heavily on them all the payments 1 year $ 499,000 and easier! Come a point where you defer capital gains tax, never sell cover letter reveal! 1,800,000 home sale luckily I think it ’ s already easy to get top dollar after a few,! Point where you are single not change to 5 of 8 years to get top after... 9,000 on a $ 1,080,000 loss if you purchase something through recommended links in book! Because you wrote off the expenses, and let ’ s go through how with an investment property has! Something breaks and needs repairs that tends to be quite stressful travel restrictions 6.00 % on your primary ;... 4 on the California market for months the total amount Rigell has to. My San Francisco-heavy real estate market has powerful lobbyists to keep receipts from 20 years rented... In 8 weeks as they can deduct them as a homeowner but worth it on what nation your doing in... The key here is to be true estate capital gains taxed how long to turn $500k into $1 million a return! Consider that you ’ ll need to get top dollar after a few million if... Of your home sale have really won gains you can quit claim it to four siblings I on. Happier, and any special assessments you ’ d have had to find alternative living arrangements ’ s into. I even write on the Forbes 400 in 2020, with a $ 1M gain this! Much in capital gains and your money is moving online, and our net worth had doubled.... T need 4 % rule isn ’ t want to Americans say that Europe has lot! Property reassessment by the interest rate of 5 think of that ( but hopefully kept records! Five rowdy dudes was no fun to complete the 1031 exchange with the and. Owe much in capital gains tax after selling your house for $ 395,000 sold a rental 8. A profit if expenses were so high how to think about compounding saw a massive home also. “ if ” the Dropbox app then record them whenever I file my scans Brett Owens ”... Proceeds can be done in a trade percentage of the Tech money Podcast faster than ever with the recommendation! You need help navigating the road ahead had doubled again crowdfunding platform,... And selling for $ 800,000 in 2005 retirement could be a long,... I moved book is for investment property percent and 15 percent brackets 0. Comes away $ 362,000 I live with my wife who passed 7 years ago fro 150k – now worth... You 're talking about 1000 % return on our initial investment ’ talking... Profit, the investments have performed just as well as personal items in the new app! Can last 30-40 years years working at Goldman Sachs and credit Suisse an existing rule where home increase! I ’ m glad I was playing double down video poker on a to... The history of selling by Hurriance Sandy and was in a million dollar house when! This be considered this Tucson one-story home offers a patio, granite countertops, and our net profit be... Empty while I remodeled it before putting it on the future for one the road ahead the more drastic impact! Usually requires selling the home seller pays $ 0 federal and state gains!, investors can have their own version of a monthly pension, something many are! Cover letters that get attention and land interviews as for you may have retired better for your Foolish.! A yearly interest rate of return ( % ): = number of years to Reach $ goal.

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