Understanding Compound Growth

The video explains the concept of compound growth through an example of twin sisters with different savings strategies. Sister one saves $2,000 annually for 10 years starting at age 25, while sister two starts saving the same amount annually at age 35 for 30 years. Despite saving less, sister one ends up with nearly double the amount due to the power of compound growth.

What is the age of the twin sisters when the example begins?

• 25 years old

• 20 years old

• 35 years old

• 30 years old

How much does the first sister save annually?

• $4,000

• $1,000

• $2,000

• $3,000

For how many years does the first sister save before stopping?

• 15 years

• 10 years

• 20 years

• 5 years

At what age does the second sister start saving?

• 25 years old

• 30 years old

• 35 years old

• 40 years old

How much total does the second sister save over 30 years?

• $20,000

• $40,000

• $60,000

• $80,000

What financial concept is demonstrated by the example of the twin sisters?

• Depreciation

• Inflation

• Simple interest

• Compound growth