Question
Consider the following two savings plans that you think about starting at the age of 21. Option 1: Save $2,000 a year for 10
Consider the following two savings plans that you think about starting at the age of 21. Option 1: Save $2,000 a year for 10 years. At the end of 10 years, make no further investment, but invest the amount accumulated at the end of 10 years until you reach the age of 65. (Assume that the first deposit will be made when you are 22.) Option 2: Do nothing for the fist 10 years. Start saving $2,000 a year every year thereafter until you reach the age of 65. (Assume that the first deposit will be made when you turn 32.) If you were able to invest your money at 8% over the planning horizon, which plan would result in more money saved by time you are 65?.
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Personal Financial Planning
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk
15th Edition
978-0357438480, 0357438485
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