If You Open an IRA and Invest $3,000 a Year

question 5

Essay

If you open an IRA and invest $3,000 a year (at the end of the year), how much will be in the account after twenty-five years if the funds earn 5 percent annually? How much would be in the account if payments were made at the beginning of the year?

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Definitions:

Dividends

Profits distributed by a corporation to its shareholders, usually in the form of cash or additional stock.

Common Stock

Common stock represents shares of ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends, albeit with lower priority than preferred stock in dividend payment and asset liquidation.

Market Price

The current price at which an asset or service can be bought or sold in a public market, determined by the supply and demand dynamics.

Unrealized Increase

An increase in the value of an asset or investment that has not been sold or exchanged, meaning the gain is not yet reflected in income.