You are considering different investment strategies to save for your retirement.
Option 1: You invest $25/ month at a rate of 3.25% APR compounded monthly for 30 years.
Option 2: You invest $75/ quarter at a rate of 4.00 % APR compounded monthly for 30 years.
Option 3: You invest $1,000 at a rate of 6.25 % APR compounded monthly for 30 years.
Complete the table below and answer the questions below it.
You may use this calculator http://www.mycalculators.com/ca/savecalcm.html to help you.
(Hint: The "Present Value" for options 1 and 2 is 0 while for option 3 it is $1,000.00. Also, the
top radio button in the Contributions box should be selected so that contributions are made at
the beginning of the period.)
Option #
Contributions
Total Interest Earned
1) Which option was the least amount invested and what was the investment plan?
2) Which option yielded the highest amount at the end of the 30 years and what was the
basis of the plan?
Be sure to include in your response:
Final Balance
3) What is the difference in the principal invested for the highest and lowest final
balances? What is the difference in the interest earned?
4) Is it better to invest more money in the beginning or the end of the 30 years?
.
•
The answer to the original question and any details that support your answer
The plan you would recommend for the largest return on investment (this means
the most interest for the least amount invested)
A general observation about the different ways to invest and the effect on the
final totals