Compound Interest: The Eighth Wonder of the World

Presented to : JLS Middle School, Palo Alto

Hey everyone! It's Rishi from FiscallyFit.org. Earlier this month, I had a blast teaching middle schoolers about compound interest. 

Here's what I shared with them:

Imagine you have $100 and put it in a savings account that earns 10% interest yearly. After one year, you'd have $110. But here's where it gets cool - the next year, you earn interest on $110, not just your original $100. So after year two, you'd have $121.

I showed them this table:

One kid shouted, "So we're earning interest on our interest?" 

Exactly! That's the power of compound interest.

We then used an online calculator to see what happens if you save $5 a week from age 12 to 65, earning 7% interest. The result? Over $134,000! Talk about motivation to start saving early.

Check out fiscally-fit.org for more cool finance stuff!