For years Atlantic City High School math teacher Robert Cacioppo taught the traditional lesson on compound interest by using the the “Rule of 72,” which says money invested for 12 years at 6 percent will double in value during that time.
The lesson was also intended to demonstrate the value of saving or investing money by showing an 18-year-old that $2,000 saved now would be worth $32,000 at age 66, or as much as $512,000 if the return on investment were 12 percent.
“It was incredible the return you could get for doing nothing,” Cacioppo said.
But over the last few years it became almost impossible to find any investments producing those returns. With a certificate of deposit offering just 1 percent, $2,000 invested for 48 years is only worth $3,224.45. The lesson today is that with inflation and taxes, investors are actually losing buying power.
So this year Cacioppo challenged his Honors Calculus students to look at money in a different way. He offered them five research options: researching the value of money, the national debt, hyperinflation, the gold standard and alternative forms of currency.
Erin Gallagher, 16, of Margate, has now concluded that it’s better to invest in things other than currency, maybe gold or silver.
Alana Storr, 17, of Brigantine, said she opened a bank account in seventh-grade when she started babysitting, and the interest it has earned is calculated in cents.
“I don’t look at it much, but it’s not very high,” she said.
Ilana Anmuth, 17, of Ventnor, discovered the United States has a lot of debt, which is not a good thing. But that led to a discussion of how much debt a country should have.
Gallagher cited Alexander Hamilton as believing manageable debt to be a good thing in providing credit and giving investors a vested interest in making sure a country remained solvent. This week has brought a real-life lesson in the monetary problems at banks in Cyprus.
“When at some point a country loses faith in its currency, it loses its value,” Cacioppo said.
Sameeha Ahmed, 17, of Atlantic City, shared money she has collected in travels to Singapore, Egypt, Mexico and Bangladesh. She has learned that they all have different values and some are worth far less than American dollars.
“I was used to American money,” she said. “It feels like you are spending more than you are.”
Yao Mai, 17, of Atlantic City, researched cybermoney, such as bitcoin, and its future potential in a digital economy.
Students also learned the pros and cons of stocks.
Justin Brog, 18, of Margate, said he invested in Ford a couple of years ago, and lost money because he bought when it was at a high price, then it dropped.
“My research wasn’t the best,” he said. “But it’s better to lose with less money now and learn. I lost a few hundred dollars. But I still have the stock and it has been coming back up.”
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