Question
Your younger brother is just starting his first real job. As part of his retirement plan, he wants to contribute $200 every TWO weeks into
Your younger brother is just starting his first real job. As part of his retirement plan, he wants to contribute $200 every TWO weeks into an account. He expects the account to earn an APR of about 8%. Interest will compound to the account every two weeks as well. You told him it is better to make those contributions at the beginning of each two week period than at the end. WHY is this so? What is the financial implication to making contributions at the beginning of the period as compared to the end? (i.e. by how much will the account balance differ?) :
Assume a 45 year investment horizon.
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