The growth rate matters for that story. The number of years Adam must contribute is ln(2)/ln(1+i). For 10 years, i = exp(ln(2)/10) - 1 = 7.17735%.An apocryphal story: two investors, Adam and Bob. Adam invests $10k per year for ten years, and never contributes a dime thereafter. Bob doesn’t contribute a dime for the first 10 years, but contributes $10k per year for the rest of his life. Both invest in exact same investments.
Who do you think has more money after the next 20 years, 30 years, 40 years (doesn’t matter)?
It is always Adam, UNLESS the growth rate is negative over that period of 20 years / 30 years /40 years. Under any assumption of a CAGR (compounded Annual Growth Rate) that is positive, Adam always wins.
Statistics: Posted by FiveK — Mon May 27, 2024 11:58 pm — Replies 12 — Views 754