Scenario A: At age 27, you invest $1,500 that earns 9 percent each year. Scenario B: At age 40, you invest $2,500 that earns 11 percent per year. Under which scenario do you accumulate more money by age 60?

Question

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In Scenario A, the investment grows for 33 years at 9%, while in Scenario B, it grows for 20 years at 11%. Despite the higher interest rate in Scenario B, the longer time frame and compound interest in Scenario A result in a larger final amount.

Scenario A: at Age 27, You Invest $1,500 That Earns