Recurring Monthly Deposits - Compounding Effect

(100 Students)

Price per Classroom

$2.00

Topics

Saving,Investment

Duration

30 Minutes

Auto-Graded?

Yes

Activity Description

In this engaging simulation activity, students will uncover the remarkable concept of compounding interest and its impact on small recurring monthly deposits. By adjusting variables like monthly contributions and savings duration, students will witness firsthand how their money can grow significantly over time through compounding.

Key Elements of the Activity:

Students will experiment with different scenarios, modifying monthly installments and savings durations to observe the effect on the growth of their savings.
They will record the interest earned for various savings durations in a table, which will help them analyze the outcomes of their experiments.
Students will investigate how adding small extra amounts (e.g., $10 or $20) affects their total interest earned, highlighting the impact of consistent contributions.

This activity promotes critical thinking as students draw conclusions about the power of compounding and the significance of regular contributions in achieving financial goals.

This worksheet is a classroom-ready interactive and dynamic worksheet that just needs a few clicks to assign to your classroom. The worksheet is auto-scored, teachers just need to open the real-time console and monitor the student progress.

Learning Objective

The objective of this activity is to enhance students' understanding of how the duration of an investment affects its growth and the total interest earned. By setting the monthly deposit amount and duration, and observing the graphical representation of their investment growth over time, students will visually grasp the concept of compound interest.

They will fill out a table comparing the same deposit amount over different durations to see the impact of time on return on investment. This hands-on exercise aims to deepen their financial literacy by illustrating the significant benefits of long-term investing and the power of compound interest.

Teacher Tips

Included with the activity, you can view the tips to clarify student's doubts or to evaluate answers (for a teacher scored worksheet).

Saving 8-4

Econ Ed -

Saving

Students will know that Interest earned on savings is the interest rate multiplied by the balance in the account, which includes the original amount saved (principal) and previously earned interest .. Students will use this knowledge to 8-4a . Differentiate between principal and interest . 8-4b . Demonstrate how earning a higher interest rate on money in a savings account will help a person to reach their savings goal sooner . 8-4c . Use the Rule of 72 to approximate how many years it will take for savings to double in value at different rates of interest .

Saving 8-5

Econ Ed -

Saving

Students will know that Compound interest is interest on both the original principal and previously earned interest, as compared to simple interest which is only interest on the original principal .. Students will use this knowledge to 8-5a . Explain the benefit of compound interest as compared with simple interest . 8-5b . Demonstrate how annual interest earned increases over time when both the original principal and earned interest are left in a savings account .