Math Problem (investment)?

You begin socking away $200/month in an account that pays 6%, compounded monthly.After some months you'll have enough money in the account so that you can stop making payments and start drawing out $200/month--forever. How many months will it take?

By convention, 6% annual interest, compounded monthly, implies a 0.05% monthly interest (6% / 12).

Step 1: determine the amount of (principle) you'll need to pay out $200 a month at 0.5% monthly interest:

$200 / 0.5% = 40,000

So our question now is how long it will take to reach 40,000 in principle. Remember that the account pays interest along the way, so it's not so simple as 40,000 / 200 (that would assume no interest).

Step 2: determine the number of months needed to reach $40,000 in principle with the following inputs:

Monthly payment: $200
Monthly interest rate: 0.5%
Total principle needed: $40,000

Using Excel's "nper" function, assuming that the payments occur at the end of each month......the answer is 138.5 months....but let's round up to 139 months.

The question isn't clear. Are you saying that the account pays 6% interest every month? Better than 72% a year? Boy, please let us know where to get such an account! Or do mean it pays 6% annually, compounded monthly?

if you have 3,333 earning 6% a month youll get 200 month. so every month that 3,333 earns 6%. thats a really high investment return-10 year bonds pay like annual 6%. at 6% monthly youll need to sock way little more than 1 year to get 3,333.

As you are an American, I shall use the Excel formula which mathematically is not quite correct.

6% pa is 0.5%pm
And to get $200pm you need a capital of $40,000

Now, to save that amount, you need to invest $200 for 139 months (=11 years and 7 months).

I have not given the formulas because they are rather long.
Good luck.