You are planning for retirement over the next 20 years and intend to invest $400 a month in an equity index fund and $200 a month in a bond index fund. The expected annual return on the equity and bond index fund is 9% and 3% respectively. When you retire, you will combine your money from both the equity and bond index funds into a bank account that pays an interest of 1.2% per year.
– Solve the amount you will have on retirement.
– Solve the amount you can withdraw each month assuming a 15-year retirement period.
– Formulate three (3) strategies you can adopt to increase the monthly withdrawal amount during retirement period.