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2) Your cousin has just graduated from college with an engineering degree. They have landed a nice job with excellent pay. Your cousin tells you
2) Your cousin has just graduated from college with an engineering degree. They have landed a nice job with excellent pay. Your cousin tells you they plan to retire earning so they are going to start saving now. Given your cousin has an engineering degree they know nothing about investing. A financial advisor they will manage your cousin's retirement account for just 0.25% of the balance of the retirement account each year. Your cousin plans to invest $18,000 a year for 35 years to fund their retirement. The financial advisor says the investments will earn on average 8% per year. Over the 35 year period how much will the financial advisor be paid if they charge 0.25%? Hint: To solve this you need to run two calculations - one at the 8% and a second at 7.75%. The difference between the two is what the advisor is paid
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