Tim & Tom's Financial Adventure

Tim and Tom are interesting characters. Their story has been told millions of times and has appeared many times in print. Some people think there is an important moral to their story.

Tim and Tom were twins. They both went to work at age 20 with identical jobs, identical salaries, and at the end of each year, they received identical bonuses of $2000. However, they were not identical in all respects.

Early in life, Tim was conservative and was concerned about his future. Each year he invested his $2000 bonus in a savings program earning 9% interest compounded annually. Tim decided at age 30 to have some fun in life and he began spending his $2000 bonuses on vacations in the Bahamas. This continued until he was 65 years old.

Tom, on the other hand, believed in his youth that life was too short to be concerned about saving for the future. For ten years, he spent his $2000 bonuses on vacations in the Bahamas. At age 30, he began to realize that some day he might not be able to work and then would need funds to provide for his support. He began investing his $2000 bonuses in a savings program earning 9% compounded annually. This continued until he was 65 years old.

Through the years, the brothers became separated. However, they were joyfully reunited at age 65 at a family reunion and exchanged many stories of the events in their lives. Eventually the conversation got around to retirements plans and savings programs. Each brother was proud of his savings and showed the other a spreadsheet describing his savings activities, terms, and accumulations.