TOPIC:

How Compound Interest Works

RESOURCES NEEDED:

Computer access

LEARNING OPPORTUNITY:

The younger people are when they start investing their money, the better off they will be financially in the future. It is important to understand how money can grow over time with compound interest. In a humorous way, this TV video clip emphasizes how the value of a small amount of money increases over a long period of time.

THE ACTIVITY:

• Ask your teen if they know what compound interest is.
• Ask if they know how it works.
• Open the following hyperlink and watch the video together.
  http://yadayadayadaecon.com/clip/61/

FOLLOW-UP IDEAS:

• Watch the clip again and note the interest rate and how it is compounded.
• Find out if Jerry’s father’s calculations were correct. Make the calculations together with your teen to see if Morty was right.

WEBSITES:

• Compound interest calculator websites:
  http://www.moneychimp.com/calculator/compound_interest_calculator.htm