Day 2 of Investing Money - toshmath621a.weebly.com€¦ · Jason’s Portfolio 1) A 10 year $2000...
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Day 2 of abbreviated Chapter 1.notebook 1 February 01, 2018 Jan 308:59 PM 1.4 – Compound interest (continued) 1.5 – Compound interest involving regular contributions 1.6 – Portfolios Day 2 of Investing Money
Transcript of Day 2 of Investing Money - toshmath621a.weebly.com€¦ · Jason’s Portfolio 1) A 10 year $2000...
Day 2 of abbreviated Chapter 1.notebook
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1.4 – Compound interest (continued)
1.5 – Compound interest involving regular contributions
1.6 – Portfolios
Day 2 of Investing Money
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1.4: What have you learned about investing money and gaining the most interest?
Ways to earn more interest (have your money make MORE money):
Choose _____________ interest rather than ____________ interest
The ________________ the interest rate, the more money you will earn
Choose a ______________ number of compounding periods per year
Invest a _________________ amount of principal
Invest your money for a _________________ period of time
Other:
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Example #1: Eva invested in a registered education savings plan (RESP). She would like the investment to grow to $14 000. The investment earns 6.8% interest compounded semiannually for 10 years.a) How much does she need to invest now to reach her goal?
b) How much interest will be earned?
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Example #2: Jan, who is 25 years old, would like to have $100 000 in a Registered Retirement Savings Plan (RRSP) at age 55 when she retires. The RRSP pays 5% per year compounded annually.
a) How much money will she have to invest now in order to have her desired amount?
b) How much interest is earned?
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Reachback Question:
Julie invested $2000 at a simple interest rate of 4.2% for 3 years. What was the future value of her money?
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Most people don’t simply invest one lump sum of money and then leave it alone for a long period of time. The most financiallysavvy people invest on a regular basis. For example, many people take a percentage of their pay cheque and invest it. This is the BEST way to save money!!!
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TOTAL = $ _________________
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Imagine if you were making biweekly contributions for 20 years . . . that would take a LONG time to calculate using the compound interest formula!!!!
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https://www.getsmarteraboutmoney.ca/calculators/compoundinterestcalculator/#.VVTSiflVikp
Thankfully, there are online compound interest calculators!!
Let's try the one you will use for your project:
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1. Colin invests $1200 in a Canada Savings Bond at 4.6 % compounded annually for 6 years. He also makes $100 biweekly contributions to this Canada Savings Bond. What is the future value of the investment, to nearest cent?
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2. Bailey would like to have $ 200 000 in an investment when she retires in 30 years. How much money should be invested now, at 8.5 % compounded annually, if she also plans to contribute $500 semiannually?* You'll need to try some different values to determine the principal
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3. Ruby made an initial investment of $5000 and annual contributions of $1000 into a GIC that paid 2.4% interest compounded quarterly. When will the investment be worth double?
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4. Tessa had saved an extra $1000 at the end of the summer that she decided to invest in a Mutual Fund that guarantees 6.3% interest, compounded monthly. She will make additional contributions of $50 biweekly. How much will her investment be worth in four years?
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Jason’s Portfolio 1) A 10 year $2000 GIC that earns 4.2% compounded semiannually.2) A savings account that earns 1.8%, compounded weekly, where he saves $55 every week.3) A 5 year $4000 bond that earns 3.9 % compounded quarterly, which he will invest in another bond at an interest rate of 4.1%.
Marsha’s Portfolio1) A savings account that earns 2.2%, compounded monthly, and has a current balance of $5600.2) Deposit $500 at end of each year, into a Canada Savings Bond that earns 3.6%, compounded annually for 10 years.3) A savings account that earns 1.6 %, compounded monthly, where she saves $200 every month.
1.6 – Portfolios: A portfolio simply means one or more investments.
Example: Jason and Marsha are each hoping to buy a house in 10 years. They want their money to grow so hey can make a substantial down payment. In 10 years, who is going to have a greater amount of money available for a downpayment on a house?
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