Openai/69188786-7324-800e-9e82-b666061428e3

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gpt-5-1

User: Let's do some investment math.

Let's do some investment math.

Assume someone contributes $12,500 per month into an investment for a total of 5 years. At the end of that accumulation phase, they will then draw $7,000 per month for 12 years.

What is the minimum annual growth rate of this investment so that the money doesn't run out before 12 years are up?

Assistant: Short answer: 3.6% annual return nominal, assuming monthly compounding.

Short answer: ~3.6% annual return (nominal), assuming monthly compounding.

Below is the clean derivation.

You contribute:

• $12,500 per month for 60 months
• Then withdraw $7,000 per month for 144 months

Let:

• rrr = annual growth rate
• i=r/12i = r/12i=r/12 = monthly growth rate

1. Future value after 5-year accumulation

Contributions are an ordinary annuity:

FVcontrib=12,500×(1+i)60−1iFV_{\text{contrib}} = 12{,}500 \times \frac{(1+i)^{60} - 1}{i}FVcontrib​=12,500×i(1+i)60−1​

2. Value needed at the start of the withdrawal phase

Withdrawals are also an ordinary annuity:

FVneeded=7,000×1−(1+i)−144iFV_{\text{needed}} = 7{,}000 \times \frac{1 - (1+i)^{-144}}{i}FVneeded​=7,000×i1−(1+i)−144​ We want:

FVcontrib≥FVneededFV_{\text{contrib}} \ge FV_{\text{needed}}FVcontrib​≥FVneeded​

Solving numerically

Testing a few candidate annual rates:

| Annual rate | Result | | ----------- | ------------------------------------------ | | 3.0% | Falls short (≈ $810k$ vs needed $848k$) | | 3.5% | Slightly short (≈ $818k$ vs needed $823k$) | | 3.6% | Just meets (≈ $821k$ vs needed $819k$) | | 4.0% | Safely exceeds |

Thus the crossover is almost exactly:

≈ 3.6% annual growth rate (nominal), with monthly compounding

At 3.6%, the money lasts just long enough to fully cover the 12 years of withdrawals without depleting early.

If you want, I can also:

• Graph the funded ratio vs rate
• Solve exactly using IRR-style methods
• Compare monthly vs annual compounding
• Add taxes or inflation for real returns