There are many reasons why people don’t save: “i don’t have any extra money.” “i promise to start next year.” “i have $100 . . what will that do? ” “i’d rather pay extra on my bills and get those taken care of first.” many people who did establish a retirement plan have found that, years into their plan, they made three mistakes: they started too late. they put away too little. they invested too conservatively. and these pitfalls are magnified when you consider compound interest. consider the compound interest effect on the following two scenarios.
jian, age 35, is starting his savings plan this year by putting away $1,950.00 at the end of every year until he reaches age 65. he will deposit this money at his local savings and loan at an interest rate of 6%. the compounding factor is 79.060. based on the information provided, how much will jian have when he turns 65?
scott, age 40, is starting his savings plan this year by putting away $1,950.00 at the end of every year until he reaches age 65. he will deposit this money at his local savings and loan at an interest rate of 6%. the compounding factor is 54.860. based on the information provided, how much will scott have when he turns 65?
jian started his investment program five years earlier than scott and invested a total of $ during those extra years. at age 65, how much more will jian have accumulated than scott?