I'm working on a lesson for my economics classes

What's a typical interest rate on a monthly compounded long term savings account?

11/20/2005 10:19:20 PM

Bank of America
Wachovia

[Edited on November 20, 2005 at 10:25 PM. Reason : ]

11/20/2005 10:24:13 PM

with a brick and mortar bank, around 1%

online around 3.5%

11/20/2005 10:25:53 PM

Sorry, I wasn't clear enough.

What I meant to say was total average interest rate you can expect to get on your savings, including stock market stuff.

The point of the lesson is to wow kids into saving.



I asked my friend who has a job and is saving, and he says 8% monthly, which sounds ridiculous

[Edited on November 20, 2005 at 10:30 PM. Reason : .]

11/20/2005 10:30:06 PM

you really need to redefine your question then

11/20/2005 10:30:31 PM

annual yield is generally around 1-1.5% for a savings account in a bank. obviously other investments offer more return with more risk

11/20/2005 10:33:20 PM

Redefined:

I save $5000 a year and invest it wisely into a diversified portfolio.

What interest rate (monthly or annual) should I expect on the whole portfolio?

[Edited on November 20, 2005 at 10:34 PM. Reason : .]

11/20/2005 10:34:32 PM

you mean rate of return, faggot

11/20/2005 10:46:34 PM

sure

11/20/2005 10:48:47 PM

The S&P has appreciated 12% over the last 70 years.

11/20/2005 10:56:13 PM

right now you should be able to get at least 3% with no min balance

11/20/2005 10:56:37 PM

I don't know how much you'll wow kids into saving with 3% interest right now that's below the inflation rate.

You would be better off suggesting getting some I-bonds from the United States Treasury

http://www.treasurydirect.gov/

Right now their interest rates are ~6%... They guaruntee to stay at least 1% above the inflation rate at all times.

11/20/2005 10:57:02 PM

doesnt matter what the s&p does over 70 years -- only about 40 years because thats how long you will have until retirement

11/20/2005 11:01:32 PM

Quote :

"The S&P has appreciated 12% per year over the last 70 years. "

11/20/2005 11:12:02 PM

^ i sure would hope so

11/20/2005 11:13:11 PM

Quote :

"You would be better off suggesting getting some I-bonds from the United States Treasury"

Probably not most of the folks on here. You have to hold them at least 12 months and you lose the last 3 months interest if you renew them before 5 years.

11/20/2005 11:31:21 PM

Meh, I'll set it at 6% yearly.

this is what happens when a history major is made to teach economics.

11/20/2005 11:34:29 PM

you should set it at 10% because its close enough and really easy to calculate

11/20/2005 11:37:43 PM

you could get CDs with around a 5% interest rate from banks, little risk and decent return (though its not liquid). 6% is probably a pretty good number.

11/20/2005 11:39:00 PM

why the hell is this guy teaching something he clearly does not understand?

11/20/2005 11:56:16 PM

its the NC way

11/21/2005 12:04:15 AM

It's not like I'm teaching investment classes.

It's a very basic 10th grade civics class-- I just want to give them an example of interest, and wanted to be somewhat accurate.

And it's because NCSU done screwed up when they placed me.

[Edited on November 21, 2005 at 12:10 AM. Reason : .]

11/21/2005 12:09:39 AM

http://www.bankrate.com/brm/rate/mmmf_highratehome.asp?params=US,416&product=33&sort=2

Highest savings account rate is with Emigrant Direct @ 4.00% APY and minimum deposit of $1.00

/thread


[Edited on November 21, 2005 at 12:22 AM. Reason : s]

11/21/2005 12:20:20 AM

motherfucker

they're letting you teach children?

the nation really is fucked

good job, dumbass

i'm glad as an educator you turn to the shitpile that is this website for guidance in shaping the minds of americas youth

11/21/2005 1:30:20 AM

Quote :

"Meh, I'll set it at 6% yearly. this is what happens when a history major is made to teach economics."

At this time, this is probably very close to accurate. While the stock market has averaged ~11% per year, the vast majority of money managers and top notch investors (including Warren Buffett) have come out and said that over the next decade, returns of 6-7% would be more in line.

11/21/2005 5:58:13 AM

If you're trying to give them an example of how they will accumulate wealth, let them know this:

You can become a millionaire by the time you retire if you start saving early. For example, if you were to max out your IRA every month and put that money into a mutual fund that gets 12% annual interest, you could easily become a millionaire by retirement if you started saving at age 22 when you get out of college.

11/21/2005 6:37:47 AM

Quote :

"put that money into a mutual fund that gets 12% annual interest"

thats a pretty nice mutual fund no?

11/21/2005 6:46:24 AM

I believe they say that for every 5 years earlier you start your investments, you'll double your final wealth at retirement.


eg:

invest $1000 per year into an account getting 10% apy
if you start at age 15, by age 60 you'll have about $800,000
if you start at age 20, by age 60 you'll have about $490,000
if you start at age 25, by age 60 you'll have about $300,000

(okay, so it's not exactly double, but it is a lot)

if you start at age 25 and invest 3 times as much per year ($3000 in this case), you'll just barely make more in the end than the first case (age 15) at $840,000


I believe it was Albert Einstein who said, "compounding interest is the 8th wonder of the world" or something.

11/21/2005 9:59:50 AM

so... to hit the exponential part of the curve where you are getting 10% per year, you need at least 40 years in the bank it seems

11/21/2005 10:18:31 AM

Man if only I had $1000 per year when I was 15-20...

11/21/2005 10:19:31 AM

^thats investing 1k per year he said


if you invest 1k when you are 21, it will only be 66k when you are 65

[Edited on November 21, 2005 at 10:22 AM. Reason : -]

11/21/2005 10:20:06 AM

I understood that. Just saying I didn't have that kind of money at that age to even think about investing.

11/21/2005 10:24:31 AM

the idea is that a parent sets that up

11/21/2005 10:25:26 AM

dem boys in the hood sell anything for profit

11/21/2005 11:07:14 AM

Just teach them the rule of 72......If you want to know how long it will take to double your investment then divide 72 by the interest rate, that will give you how many years it will take. If you put $1,000 in something that has an interest rate of 10% it will take 7.2 years for it to be worth $2000. 72/10= 7.2

11/21/2005 11:16:06 AM

i get 3.25% on my MM NC Secu account

11/21/2005 11:31:06 AM

For a deposit account, you generally find .3-1%. Money market accounts pay higher, but usually have higher minimum balances. The exceptions are credit unions and online banks.

For long term retirement investments, you generally shoot for 8% in a diverse, fairly low-risk portfolio.

11/21/2005 11:37:29 AM