Warning About Dealers And Their Pricing

[Jstpssng]

Lions are not concerned with the opinions of sheep

AAAARRGH! You just made me spit beer all over my screen!

 

[Cahaba Valley Farm]

Yes. I use a credit union as well. I was really just pointing out that the compounding interest on savings or bonds has not followed the rule of 7s for many years now. I works if looking at the stock market but most younger people I know don't know much about that either. I usually teach people about interest using the amortization schedule on a 30 year mortgage to show them how rates influence the payments and how to cancel out interest payments on the front end of the loan. Once they understand that I figure they should be able to apply that elsewhere.

Do you teach economics like Torvy?

 

[IndyJay]

Do you teach economics like Torvy?

I think he just did...

 

[Torvy]

Rule of 7 is a marketing thing. Rule of 72 is finance...compounding interest, probably meant 72. Not sure how math stopped working. The rule of 72 would say at 1% it would take 72 years to double. Interest has been lower, so it would take longer. I have a nice future value spreadsheet I give the kids to play with. It shows them how much they can save/earn over their earning years. The graph makes it very clear how much compounding interest works. It also adjusts for inflation so they can see that too.

 

[Cahaba Valley Farm]

Rule of 7 is a marketing thing. Rule of 72 is finance...compounding interest, probably meant 72. Not sure how math stopped working. The rule of 72 would say at 1% it would take 72 years to double. Interest has been lower, so it would take longer. I have a nice future value spreadsheet I give the kids to play with. It shows them how much they can save/earn over their earning years. The graph makes it very clear how much compounding interest works. It also adjusts for inflation so they can see that too.

Torvy this would fall under micro economics correct?

 

[2manyrocks]

Finance calculations were taught in finance class. Microeconomics is more about economic theory applied at the level of a business. Macroeconomics is economic theory applied at the level of a country or internationally.

A lot of these financial as well as statistic calculations are built into spreadsheets these days.

My school started letting accounting majors use calculators and they started failing the CPA exam after graduation because they couldn't add numbers in their heads. So they went back to making them use their heads instead of calculators.

 

[Torvy]

Torvy this would fall under micro economics correct?

More than macro, yes. Really a Finance thing, but there is some crossover.

 

[Torvy]

Finance calculations were taught in finance class. Microeconomics is more about economic theory applied at the level of a business. Macroeconomics is economic theory applied at the level of a country or internationally.

A lot of these financial as well as statistic calculations are built into spreadsheets these days.

My school started letting accounting majors use calculators and they started failing the CPA exam after graduation because they couldn't add numbers in their heads. So they went back to making them use their heads instead of calculators.

My wife's undergrad was Finance + MBA. She hired a lot of accountants over the years. The irony is that after the CPA exam, they get little value from doing work in their heads as they use spreadsheets. Before that, they used calculators with tape output.

 

[TractorNoob39]

Do you teach economics like Torvy?

No I do not. I just help where I can.

 

[TractorNoob39]

Rule of 7 is a marketing thing. Rule of 72 is finance...compounding interest, probably meant 72. Not sure how math stopped working. The rule of 72 would say at 1% it would take 72 years to double. Interest has been lower, so it would take longer. I have a nice future value spreadsheet I give the kids to play with. It shows them how much they can save/earn over their earning years. The graph makes it very clear how much compounding interest works. It also adjusts for inflation so they can see that too.

You are right....I just always remembered it as rule of 7s...10% return annually doubles initial investment at about 7 years. I like the amortization schedule because it saves all homeowners tons of money on the front end of home loans. Dramatic enough difference that people show interest in learning