Compound Interest

45-minute agenda

1. 0–5 min

   Warm-up

   Post: “Would you rather have $1 million today, or a penny that doubles every day for 30 days? Decide before you calculate.”

   Teacher note: Take the penny: on day 30 alone it's worth $5,368,709.12. Most of the growth happens in the last few days — that's compounding.

2. 5–12 min

   Direct instruction

   Present the lesson slides. Make sure students leave with these points:

   • Compound interest = interest on your interest.
   • Growth depends on amount, rate, and time. Time is your biggest advantage.
   • Rule of 72: 72 ÷ rate ≈ years to double.
   • Compounding makes debt grow too.
   • Calculators show hypothetical scenarios. Real returns vary and aren't guaranteed.

   Use the “See it” slide ($1,000 at 10% a year: simple vs. compound) to make the idea visual.

3. 12–17 min

   Worked example

   Walk through “Alex starts early. Jamie starts later.” on the slides. Pause before the result and ask students to predict it.

4. 17–22 min

   Live demo

   Project compound growth calculator from the slides or the Compound Growth Calculator. Change one input at a time and have students call out what they think will happen.

5. 22–32 min

   Race to 65

   Format: pairs · 10 minutes

   1. Saver A invests $100 a month from age 18 to 28, then stops adding money. Saver B invests $100 a month from 28 to 65.
   2. Pairs predict who has more at 65 at a hypothetical 7% a year, and why.
   3. Project the compound growth calculator and test both savers together.
   4. Pairs write one sentence explaining the result using the word “time.”

   What to look for: Saver A (10 years of deposits, $12,000 in) ends with about $228,988. Saver B (37 years of deposits, $44,400 in) ends with about $209,654. Starting early gave A's money decades longer to compound.

6. 32–37 min

   Check for understanding

   Use the question slides — or run them as a Four Corners game. Answers:

   1. Why does the 30-year balance end up more than three times the 10-year balance? — B. Later years earn interest on a much bigger balance, including all past interest.
   2. Using the Rule of 72, about how long does it take money to double at 8% a year? — C. About 9 years
   3. Compound interest only helps you — it can't work against you. — False
   4. Which factor in compound growth does a 16-year-old have that someone starting at 40 can't get back? — A. Time
7. 37–42 min

   Discussion

   • Alex put in $6,000 and Jamie put in $24,000. Does it feel fair that Alex ends up with more? What does that tell you about time?
   • How could compound interest explain why some people get stuck in credit card debt?
8. 42–45 min

   Exit ticket

   Prompt: What three things decide how much compound growth you get? Which one does a teenager have the most of?

   Answer: Amount, rate, and time. Teenagers have the most time.