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Compound Interest example-saving for retirement We talked in class about the power of compounding to increase the FV of a sum. The historical average yield
Compound Interest example-saving for retirement We talked in class about the power of compounding to increase the FV of a sum. The historical average yield of the US stock market is 12% (sometimes higher, sometimes a lot lower, but this is the overall average). Two twin brothers, Ben and Jerry, are starting to think toward the future, and put away some money into the stock market for retirement (use 12% as your compounding rate). Ben starts at age 19, and invests $2000 a year at the end of each year. He does this for 8 years until he is 26, then stops and puts nothing else in the account, leaving the balance to continue to grow with no new payments. His brother Jerry sees what Ben is doing, and thinks that is a good idea. He starts at age 27, and invests $2000 a year for the next 39 years, until he is 65 For each brother, tell me: Compound Interest example-saving for retirement We talked in class about the power of compounding to increase the FV of a sum. The historical average yield of the US stock market is 12% (sometimes higher, sometimes a lot lower, but this is the overall average). Two twin brothers, Ben and Jerry, are starting to think toward the future, and put away some money into the stock market for retirement (use 12% as your compounding rate). Ben starts at age 19, and invests $2000 a year at the end of each year. He does this for 8 years until he is 26, then stops and puts nothing else in the account, leaving the balance to continue to grow with no new payments. His brother Jerry sees what Ben is doing, and thinks that is a good idea. He starts at age 27, and invests $2000 a year for the next 39 years, until he is 65 For each brother, tell me
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