Question

bellringer for today is: - if you save an extra $50 a month starting at age 18 versus starting at age 28, how do you think that 10 - year difference could affect your total savings by age 65? (assume a 7% annual return) - write 3 - 5 sentences about the concept of compounding and why starting to save early is so important.

Explanation:

Compounding refers to earning returns on both the initial investment and the accumulated returns over time. When you start saving early (e.g., at age 18 vs. 28), the money has more time to compound. The 10 - year head - start allows for more periods of compounding. Over the long - term (until age 65), this can lead to a significantly larger total savings amount due to the exponential growth nature of compounding.

Answer:

Compounding means returns on initial investment and accumulated returns. Starting early (age 18 vs. 28) gives more compounding time. By age 65, the 10 - year difference leads to much larger savings due to compounding's exponential growth.