Final answer:
Paul Springer's strategy for saving for a house down payment in 10 years involves saving early to benefit from compound interest and aiming for a down payment that minimizes additional costs like mortgage insurance.
Step-by-step explanation:
Paul Springer's strategy to save for a house down payment in 10 years would involve understanding the importance of down payments and the power of compound interest. While a higher down payment is generally recommended, such as the 20% rule, there are options for lower down payments between 0-3.5%. However, these often require the purchase of mortgage insurance, which increases the total mortgage amount paid over time.
To effectively save for a down payment, Paul needs to leverage compound interest by starting to save as soon as possible. For example, if Paul saves a certain amount at an assumed 7% real annual rate of return, his investment could grow significantly over the years. This exemplifies how starting early can result in a much larger savings amount due to compound interest.
Therefore, Paul's strategy should incorporate both a prudent down payment that mitigates the need for mortgage insurance and a disciplined saving plan capitalizing on compound interest to maximize his savings by the end of 10 years.