1. You bought $5,500 worth of stocks in a certain company with your Roth IRA contributions. Rank the following scenarios in the order of your preference: (a) The stock grows at 20% a year for the first 5 years, follow by 10% a year for the next 5 years. (b) The stock grows at 10% a year for the first 5 years, follow by 20% a year for the next 5 years. (c) The stock grows at 15% a year for 10 years.
2. If you save $500 per month into your retirement account between age 20-29 (more precisely, [20, 30)), you will have more money at 65 than if you save $500 per month from 30-64 (more precisely, [30,65)). At what rate of return is this claim true?You can assume that your contributions are made starting on the day you reach the specified age, and the same day in the subsequent months.
3. "I have just bought my first house. Economists are predicting high inflation in the future because of the Fed's recent moves. I sure hope they are getting that right!" Why might it make sense for someone to say this?