1. DO NOW: If you were given a million dollars and you could not spend any of it for at least 20 years, how would you save (invest) it? By how much do you think you could grow the million dollars? Why might it be a bad idea to save your million dollars in a high security vault?

2. Two recent college graduates, Bob and Sidney, are talking about saving. Each has the opportunity to create a saving plan that will help him in the future. Bob wants to open an IRA (Individual Retirement Account) to save money for his retirement when he turns 62 in 40 years. Sidney thinks a savings account is best. He thinks it is important to have access to his money over the years and will worry about retirement once his family is grown. Bob & Sidney sought help from a financial advisor to decide which account is best. They learned: 1) In an IRA, you can invest in a wide variety of stocks, mutual funds and other investments. Over the last 5 years the average rate of return on the IRA has been 5 % per year. The rate of return for an IRA is not guaranteed. They may earn 5% this year, 10% next year and then lose 5% the year after. 2) A Certificate of Deposit has a guaranteed interest rate, but you cannot use the money for the duration of the CD—which can range from six months to more than 10 years. 3) A regular savings account has a guaranteed interest rate. The interest rate is much lower than that of the CD, but you can withdraw the money at any time. ACTIVITY 1: Which savings plan seems to be the best? Which one will earn each college graduate the most money in 40 years at age 62?

3. How do you calculate interest on savings in Excel? http://www.myonlinetraininghub.com/how-to-calculate- interest-on-savings-in-excel On an excel spreadsheet, calculate the following: How much would you have after 5 years if you invested $1000 at 4% a year (simple interest)? How much would you have after 5 years if you invested $1000 at 4% a year (Compounded interest)?

4. On-line Financial Calculators: On-line financial calculators, examples: www.dinkytown.net, www.bankrate.com www.dinkytown.netwww.bankrate.com Basic Financial Calculator : http://www.dinkytown.net/java/FinCalc3.html

5. Summary Go to a major bank’s website (Chase, Citibank, TD Bank, Wells Fargo, HSBC, etc.) and find out the current interest rates for an FDIC insured: – Savings Accounts – CDs (Certificate of Deposit) How much interest can you earn with a 1 year CD? Why might you decide to invest your money in a riskier investment like a stock? Using the Rule of 72, how long will it take you to double $1,000 at that interest rate? How long will it take to double $1,000 at 8% interest?