Featured Activity: The Power of Compound Interest

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Feb 12, 2015
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Activity, Investing, Savings, Stocks, Current Events

Over the next few weeks, I will be highlighting 30-45 minute activities that we have created to extend student learning.  You can our NGPF Activities in our Activity Bank (click on Activity Bank on the left hand side of the screen).  The focus of the activities is hands-on learning and having students drive their own learning process.  We all know how easy it is to tell a student that compound interest is important, but you also know how much more fun it is to have those “Aha” classroom moments as students calculate the impact of savings and investing decisions using a compound interest calculator.

NGPF’s Calculate: Compound Interest Activity (Click Study button to begin) introduces the concept of a compound interest calculator to students and then walks them through several scenarios, including a saver who starts early and saves in low-interest savings account, another early saver who invests in stocks and another saver who doesn’t start saving until their 50’s.  Students then create their own scenario and run the calculations through the compound interest calculator.  Finally, the students reflect on the various scenarios and write down the insights they gained from this exercise.

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This chart demonstrates the power of compound interest as does this recent case study (which includes an Excel spreadsheet) of a 92-year old Vermonter who accumulated an $8 million estate.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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