Using the "Cool Million" Chart an Interactive "Cool Million" Chart

question 221

Short Answer

Using the "Cool Million" Chart An interactive "Cool Million" chart in the textbook's OLC enables you to visualize the growth of your retirement savings over several years. Another feature allows you to determine what changes you would need to make to your investment plan for you to attain nominal "millionaire" status on your 65^th birthday. Go to the Student Edition on this textbook's OLC. In the navigation bar, select "Chapter 11" in the drop-down box. In the list of resources for Chapter 11, select "Links in Textbook" and then click on the link named "Cool Million." Enter data for an investment plan that will be reasonable for you after you gain fulltime employment. Note that the "Expected rate of return" and the "Expected inflation rate" are both annually compounded rates. Click on the "Calculate" button to generate a new chart. The series of blue bars show the growth of your investments. If you move your cursor over any bar, the numerical value (in $000s) will be displayed. The series of purple bars represent the inflation-adjusted value, or purchasing power, of the investments in terms of dollars at the very beginning-the "Your age" date. If you click on the "View Report" button, a window containing a bulleted list of three suggested changes will appear. Any one of these changes to your savings plan will enable you to accumulate (a nominal) $1,000,000 at your target retirement age. Adjust one or more items in your input data to arrive at a plan that represents your best chance of entering retirement as a millionaire. What will be the purchasing power of your nominal $1,000,000 in beginning dollars?

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Definitions:

Wealth of The Nation

A measure of the total value of all assets owned by the inhabitants of a country, including natural resources, capital goods, and human capital.

Re-expression

The process of applying a mathematical transformation to a dataset with the goal of achieving a more linear or normal distribution.

Scatterplot

A graphical representation using dots to show the relationship between two quantitative variables, helping to visualize any correlations.

Quantities X and Y

Refers to variables or values that are often used in mathematical equations or statistical models to represent data, measurements, or unknowns.