3. Compound interest and its effects Understanding the Impact of Compounding There are many reasons why people don't save: "I don't have any extra money." "I promise to start next year." "I have $100. . what will that do?" "I'd rather pay extra on my bills and get those taken care of first." Many people who did establish a retirement plan have found that, years into their plan, they made three mistakes: - They started too late. - They put away too little. - They invested too conservatively. And these pitfalls are magnified when you consider compound interest. Consider the compound interest effect in the following two scenarios. (Note: In your calculations, use either the formula or the financial calculator. Round your answers to the nearest cent.) Sean, age 30 , is starting his savings plan this year by putting away $1,050.00 at the end of every year until he reaches age 65 . He will deposit this money at his local savings and loan at an interest rate of 6%. The compounding factor is 154.760 . Based on the information provided, by the time Sean turns 65 , he will have Yvette, age 35, is starting her savings plan this year by putting away $1,050.00 at the end of every year until she reaches age 65 . She will deposit this money at her local savings and loan at an interest rate of 6%. The compounding factor is 111.430 . Based on the information provided, by the time Yvette turns 65 , she will have Sean started his investment program five years earlier than Yvette and invested a total of \$ during those extra years. By the time Sean turns 65 , he will have accumulated more than Yvette