Comment by danielbarla

Comment by danielbarla 4 days ago

While I certainly had the _concept_ of compound interest taught to me at some abstract mathematical level, the application to real life practical financial scenarios was definitely not done [1]. Economics as a whole was an optional subject.

I think schools and curriculums could do a whole lot better in representing this important facet of life. More broadly, I often feel that "applying all that math you've learned to real things" is a subject that could be taught.

[1] Seriously, having applied math questions like "Johnny earns X per year, with a cost of living of Y. Assuming inflation of Z and average yearly returns of R, what percentage should he be putting away, starting at age 25, so that at age 50 he essentially gets the equivalent of his own salary each month?" would likely cause some lightbulbs to go off in the kids' heads.

triceratops 4 days ago

> the application to real life practical financial scenarios was definitely not done

Of course it was. You can't teach compound interest without referring to money or banks. That's the whole point of it. Otherwise it's just multiplication.

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sebastiennight 4 days ago

It... is just multiplication. And can't talk about GP's experience, but I can tell you that going through scientific schooling and engineering schools in the French system you'll learn exactly how to calculate the math and never have a single example such as mentioned above.
We're here to build bridges, not count stashes of money after all!
You'd probably get those if you went through "economic studies" (which is a different track and where math includes a lot more statistics even in high school).

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TeMPOraL 3 days ago

Not only you can, I still don't see how the financial "magic of compounding" isn't bullshit for vast majority of people - you can't really make significant money this way in reasonable time spans (5 years rather than 50).

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- a96 3 days ago
  
  5 years is "get rich quick!" scam territory. The real aim is to manage finances for the rest of your life which may or may not be 50+ years, but will definitely be in double digits if you're of an age for thinking of managing your savings. If your horizon is shorter than that, you're essentially on your deathbed already.
  
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- triceratops 3 days ago
  
  5 years isn't a reasonable timespan. Compounding over the course of a 35 year career, earning a modest wage, will fund a comfortable 20 year retirement. If that's "bullshit" for most people then too bad. Good things come to those who wait etc.
  
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  ncruces 3 days ago
  
  A 20 year retirement on the back of 35 years of working means dying before you're 80?
  Given current life expectancy, and particularly if you find a life partner, the chances of at least one of you surviving through at least 85 are pretty high (like above 60% for the US).
  
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  triceratops 3 days ago
  
  I assumed that a "real" career and substantial savings, after paying off debt, begin at age 30. And the 20 year retirement was me being conservative. In truth, saving only 20% of your take-home for 35 years will be more than enough for 40 years.
  
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Ekaros 3 days ago

I wonder where it will go when Y>X. Maybe open question what is the solution. A) Violent revolution and Johnny taking over means of production. B) Death.

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array_key_first 4 days ago

The problem is that the financial industry is, like, capitalism-maxxing.

How do you teach "financial literacy" in a practical way without referring to specific products, offerings, or corporations? You really can't.

If you talk to people about investing or retirement, they're gonna talk about Fidelity, Vanguard, whatever. Which is very practical. But I'm not so sure we need our government and education system to basically directly endorse these corporations.

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