Chapter 5: The Power of Investing
LESSON GOAL
BY THE END OF THIS LESSON,
you’ll understand what compound interest is, how it grows your money over time, and why starting early gives you a huge advantage. You’ll try a hands-on activity to see how small amounts can turn into something big — just by being patient and consistent!
💬 let’s break it down
You’ve already heard about interest — that’s when you earn extra money just for saving or investing.
But compound interest is even cooler.
🌀 It’s when you earn interest on your interest — so your money keeps growing faster and faster the longer you leave it alone.
Let’s say you save $100:
Year 1: You earn $10 interest = $110
Year 2: You earn 10% of $110 = $11
Year 3: You earn 10% of $121 = $12.10
… and it keeps growing from there!
You didn’t add any more money — your interest is doing the work. That’s the power of compounding. It’s like a snowball rolling downhill, getting bigger all on its own. ❄️
The secret? Start early and give it time.
🧠 ANALOGY: Compound Interest is Like a Snowball
At first, your snowball is small. You roll it through the snow, and it starts to pick up more snow… and more… and MORE.
Each time you roll it, it gets bigger — not just because of what’s already there, but because it's growing on top of what it already grew!
That’s compound interest. Your money grows… on top of your growth!
🤔 critical thinking questions
Why does compound interest work better when you start young?
What happens if you keep spending your interest instead of letting it grow?
Would you rather have $1,000 now or $100 that doubles every year for 10 years?
How can you make compound interest work for you instead of against you?
✍️ journal entry: “My Money Snowball”
Draw or describe your very own money snowball.
How big is it now?
What will it look like in 1 year? 5 years? 10 years?
What will you use your snowball for when it’s fully grown?
Write one thing you’ll do now to help it start rolling!
👨👩👧👦 ACTIVITY WITH FAMILY OR FRIENDS: The Interest Dice Game 🎲
What You’ll Need:
Dice or a number spinner
A notebook or printable tracker
$100 in pretend money to start
How to Play:
Each player starts with $100.
Roll the dice to see how much interest you earn each “year”:
1 = 1% | 2 = 2% | 3 = 3% … up to 6 = 6%
Multiply your total by the percentage and add the new amount.
Keep going for 5–10 rounds (years), compounding each time!
See who ends up with the most money — and who stayed patient!
🎯 What This Teaches: Small interest might not seem exciting at first, but over time, it adds up in big ways — especially if you keep letting it grow.
💵 real-life practice: Try a Monthly Savings Challenge
Start with $1 (or more) in savings this week.
Each week, add a little more — even if it’s just coins.
Track how much it grows with your parent’s help.
Talk about what might happen if you left it alone for a year… or even longer!
🌟 Bonus: Ask your parent to match your savings “interest” each month so you can see your growth in action!
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