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Two people are planning to save $500 a month in a Roth IRA starting a month from now. (The maximum is $6000 annually.) The person
Two people are planning to save $500 a month in a Roth IRA starting a month from now. (The maximum is $6000 annually.) The person a will invest in a bond fund that has an expected rate of return of 3.0%. Person b will invest in a target date fund that invests in stocks and bonds. The target date fund is expected to have an annual rate of return of 7.5%. Assuming each fund yields the expected returns, how much more will the person b have than person a at the end of 40 years?
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