Inflation-adjusted net worth
By saving 30% per year, your simulation shows that you can accumulate $896,962.66. Not quite a millionaire, but not bad at all!
For the sake of simplicity, let's assume you were able to save $900,000 by following your budget.
But what if you retire 15 years from now? What is $900,000 going to be truly worth 15 years from now?
This exercise is part of the course
Introduction to Financial Concepts in Python
Exercise instructions
- Set your
future_net_worth
equal to $900,000. - Set the annual inflation rate equal to 2.5%. Do not compound inflation monthly.
- Using
.pv()
, calculate the present value of your net worth 15 years from now.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
import numpy as np
# Set your future net worth
future_net_worth = ____
# Set the annual inflation rate to 2.5%
annual_inflation = ____
# Calculate the present value of your terminal wealth over 15 years
inflation_adjusted_net_worth = ____(rate=annual_inflation, nper=____, pmt=0, fv=-1*____)
print("Your inflation-adjusted net worth: $" + str(round(inflation_adjusted_net_worth, 2)))