Mutual fund investing
In a mutual fund 401(k)that you have through work, you notice that for every dollar you invest, your company also invests a dollar. (You are able to invest up to 5% of your annual income, and your company has a 5% match.)
What return on your investment does this represent? What does your answer suggest about matching programs?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/mutual-fund-investing-7gl8
...ograms are always good deals for the employee. After all, even if the company matched just 10 percent, for instance, you would gain $.10 for every $1 invested. By investing your $1, you would have $1.10 working for you in the account! If the investment increases by 10 percent, your account would be worth $1.21 (i.e., the $1 you invested, the .10 your employer invested, and 10 percent of the $1.10, or $.11).
Your Investment $1.00
Company Match .10
Total Invested $1.10
Gain on Investment .11 ($1.10*1.10)
Account Value After Gain $1.21
Return on Investment=(Account Value After Gain-Your Investment)/Your Investment
Return on Investment=($1.21-$1.00)/$1.00=.21 or 21%.
You would not have gained 21 cents for your invested $1, or 21 percent. Had ...