22
Becoming Money $mart
Look at the following example to see how quickly your money can grow
over a period of three years.
Year Quarter Principal
4%
Rate
Time
.25
New
Balance Deposit
Quarter
Balance
1 1 $2,000.00 $80.00 $20.00 $2,020.00 $500.00 $2,520.00
1 2 2,520.00 100.80 25.20 2,545.20 500.00 3,045.20
1 3 3,045.20 121.81 30.45 3,075.65 500.00 3,575.65
1 4 3,575.65 143.03 35.76 3,611.41 500.00 4,111.41
2 1 4,111.41 164.46 41.11 4,152.52 500.00 4,652.52
2 2 4,652.52 186.10 46.53 4,699.05 500.00 5,199.05
2 3 5,199.05 207.96 51.99 5,251.04 500.00 5,751.04
2 4 5,751.04 230.04 57.51 5,808.55 500.00 6,308.55
3 1 6,308.55 252.34 63.09 6,371.63 500.00 6,871.63
3 2 6,871.63 274.87 68.72 6,940.35 500.00 7,440.35
3 3 7,440.35 297.61 74.40 7,514.75 500.00 8,014.75
3 4 8,014.75 320.59 80.15 8,094.90 500.00 8,594.90
Amazing, isn’t it? For most savings accounts, the interest is compounded
daily, which makes your money grow even faster.
You
Do the Math 1-4
Now, you try it. Begin with a deposit of $3,500 and deposit an
additional $300 each quarter. Your interest rate is 5% compounded
quarterly for a period of three years.
Year Quarter Principal
4%
Rate
Time
.25
New
Balance Deposit
Quarter
Balance
1 1 $3,500.00
1 2
1 3
1 4
2 1
2 2
2 3
2 4
3 1
3 2
3 3
3 4