Scenario #3: Isaiah Isaiah is in his 50s and currently does not have a retirement fund. However, he recently read a few articles about the insufficient savings of people in retirement and, as a result, he decides he wants to start now. He saves $500 per month for 15 years and earns 7% by investing in the stock market* through an index fund.

9. What is the total balance in the account after 15 years?

10. How much of the total did Isaiah contribute himself?

11. How much money did Isaiah make through compounded returns in this investment account?

12. Explain why Isaiah’s total balance is less than Pamela’s even though his money earned the same rate of return and his monthly contribution was higher than hers.

Question 4: If someone you know wanted to start investing, what best practices would you recommend they follow so they can harness the power of compounding? Explain your reasoning.

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