- 1). Calculate the rate of return on any investment in your portfolio. Divide the interest rate into the number 69 for an approximate value. For example, a 7 percent bond produces income that doubles in about 9 and 3/4 years (69 divided by 7). For stocks with 10 percent appreciation and a 5 percent yield, the doubling time is 4 and 2/3 years (69 divided by 15).
- 2). Compute the monthly contribution you will receive if you invest all your retirement monies in a fixed-income account. Take the total amount of monies and multiply by the interest rate of the 10-year U.S. Treasury bond or a short-term CD. Divide the result by 12. This is the gross yield or interest available to the account holder.
- 3). Compute the monthly contribution you will receive if you invest all your retirement monies in a fixed-income account and also withdraw principal at the rate of 10 percent per year. Note that this is required at age 70. Multiply .1 times the value of the IRA. Take the result from step two and multiply by .9. Add the two results together. Divide by 12. The result is the approximate amount of monthly withdrawal available to the owner of the IRA.
- 4). Compute the current yield of the IRA account. The current yield is the total amount of cash generated from the IRA. Add all dividends and interest income. Divide the total income by the current value of the investment. The result is current yield.
- 5). Compute the total return of capital gains as an interest rate. Value the account today and as of a year ago. Divide last year's value by the current value. The result is the rate of return through capital gains expressed as an interest rate.
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