Asked by Linda Cashdollar on Apr 23, 2024
How much larger will the value of an RRSP be at the end of 20 years if the contributor makes month-end contributions of $500 instead of year-end contributions of $6,000? In both cases the RRSP earns 4.5% compounded semi-annually.
Compounded Semi-annually
The process where interest is added to the principal of an investment or loan twice a year, resulting in interest earning interest.
RRSP
Registered Retirement Savings Plan, a Canadian investment account for holding savings and investment assets, aimed at retirement planning.
Month-end Contributions
Payments or deposits made into a particular account or for a specific purpose at the end of a month.
- Ascertain the worth of consistent deposits into savings schemes over duration, considering the effects of compound interest.
- Assess the financial implications of altering the intervals at which payments are made on investments and loans.
Learning Objectives
- Ascertain the worth of consistent deposits into savings schemes over duration, considering the effects of compound interest.
- Assess the financial implications of altering the intervals at which payments are made on investments and loans.