Starting your long-term saving as early as possible (10 years earlier in the example) can allow you to end up with twice as much in savings, even though you only saved one third as much ($30,000 saved vs. $90,000 saved) use a 2% annual return instead of 10% in your calculations?

Question

Mathematics

Justin Underwood

26 January, 13:42

Starting your long-term saving as early as possible (10 years earlier in the example) can allow you to end up with twice as much in savings, even though you only saved one third as much ($30,000 saved vs. $90,000 saved) use a 2% annual return instead of 10% in your calculations?

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Answers (1)

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Aiden Watson · Answer 1

The correct answer isFalse.

Step-by-step explanation:

This statement is not correct starting your long-term saving as early as possible (10 years earlier in the example) can allow you to end up with twice as much in savings.

Let say we plan to invest/sace $ 50,000.

At 2% rate our saving after 10 years will be

Saving = 50,000 (1+0.02) ^10 = $ 60,950

At 2% rate our saving after 20 years will be

Saving = 50,000 (1+0.02) ^20 = $ 74,300

Even we have save for more period still we do not end up with twice as much in savings.