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A Deniece has accumulated $50000 in her thrift savings plan at her job at the Federal Aviation Administration The government puts in 1% of her pay and matches up to another 4% if she puts in 5% out

A Deniece has accumulated $50,000 in her thrift savings plan at her job at the Federal Aviation Administration. The government puts in 1% of her pay and matches up to another 4% if she puts in 5% out of her pay. Deniece earns $80,000 a year and plans to add 5% from her income plus the agency 5% for a total of $8,000 per year. Her cousin Eugene says that if she invests in stocks, she can earn 12% per year because that has been the long term history.   How much will she have in 25 years at retirement if she can earn 12% per year compounded annually?

  

2-B Deniece's friend Marshall heard a speech by John C. (Jack) Bogle, founder of The Vanguard Group of Mutual Funds, one of the lowest cost and most successful group of funds. Jack said that with the increasing need to reduce carbon emissions, it is unlikely that long term stock returns can exceed 6% per year. Steps to reduce carbon will likely reduce prospects for economic growth in Mr. Bogle's opinion. How much will Deniece have if Jack Bogle is correct and the earnings will be 6% per year compounded annually?

 

May 21 2020 View more View Less

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