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Compound Interest and the Power of Saving
  • Richard H. Serlin, University of Arizona

This is an article with an included assignment that I give to my personal finance 1 students. The first part talks about the power of compound interest. I go into depth about the intuition why it's so powerful, why it takes off, and has been called the eighth wonder of the world. I've haven't seen anywhere else an extensive explanation of the intuition like I have here.

In the second part I give the students a nice assignment to see how much their savings can grow if they invest even a modest amount consistently, month in and month out, in a diversified stock fund which earns the historical average return.

The assignment utilizes an Excel calculator (available at this site) that I made to see these things quickly, clearly, and easily.

Publication Date
Citation Information
Richard H. Serlin. "Compound Interest and the Power of Saving" (2014)
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