From Ms. Delacroix, for Thursday, November 19. Type in your own numbers and watch what the interest adds. Then try the three questions at the bottom.
$
In the account today
$
Added at the end of each month
%
A year, from 0 to 20
Whole years, up to 50
How it's worked out
Interest is added once a month. That's monthly compounding: each month the balance earns one-twelfth of the yearly rate, and next month's interest is worked out on the new, bigger balance.
The deposit goes in at the end of each month, after that month's interest.
The rate here never moves. Real ones do. A bank can change a savings rate whenever it likes, so the far end of the chart is a sketch, not a promise.
Left out: tax on the interest, account fees, and rising prices, which make each future dollar buy a little less.
After 10 years at 4% you'd have
$7,660.66
You put in
Interest added
Year by year
Try these before Thursday
Set the interest rate to 0. How much of the total was yours all along?
Put the rate back to 4 and change 10 years to 20. What you put in roughly doubles. What happens to the interest?
Which ends up bigger: $50 a month for 20 years, or $100 a month for 10? You put in the same $12,200 either way.
Write your three answers down and bring them to class. The page doesn't keep them.
This is for learning how saving works. It isn't financial advice.