Using solver for financial planning
June 13th, 2009Jyoti is such a quiet student but her questions are so to the point. She is just 17. While we were trying to understand the use of Solver in Excel a few days back, she came to me and said: Sir, how can we use the Solver for our financial planning? I said: Financial planning as in? She replied: For my retirement. Everybody in the class smiled and a few laughed. She didin’t care about that. She was serious about the retirement planning. We then did some basic calculations like putting aside some money every year, getting interest on the investment at 10%, saving money for about 20 years regularly and finally having the money when she retired. The calculations used simple arithmetic functions. Now came the real thing: we wanted to find for Jyoti the minimum amount she would have to invest every year for the next 40 years to achieve her financial freedom when she retired. We also created an Excel training video. Nobody in the class laughed. Everybody thanked Jyoti for her excellent idea.
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