Introduction
If you had one million dollars, what would you do with it? Perhaps you would build your own house or start your own business. Maybe you would travel around the world or help a sick relative. You might even consider donating some of the money to charity. With $1,000,000 you could probably do all of these things and more!
Did you know that it is possible for you to become a millionaire during your lifetime? To become a millionaire you do not need to win the lottery, win a contest, appear on a game show, or have a job with a large salary. All you need is some money to invest, a willingness to take some risks, and the foresight to START YOUNG. Are you guaranteed to become a millionaire? No – there are no guarantees in life. However, odds are that if you are willing to take some risk and invest some of your money, you very well may make $1,000,000 or more during your lifetime.
This webquest will allow you to explore the possibility of becoming a millionaire by investing different sums of money in two types of investments; savings accounts and mutual funds. (Note: For the purposes of this webquest, assume that interest rates will remain constant during your lifetime – this may or may not hold true. Also, this webquest does not take into consideration the taxes you would be required to pay on your earnings).
Task
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Find the average salaries for three different jobs that are of interest to you;
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Use the compound interest formula to explore two different investment options, savings accounts and mutual funds, determine the risks and benefits of investing in each, and determine which of the two options is more likely to help you reach your goal of $1,000,000;
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Respond to several questions based on your findings; and
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Prepare a 5 minute presentation to share your findings with your classmates.
Process
Step 1: You will need to choose one of the roles below. The more realistic your choice is, the more helpful this project will be.
Less than High School
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For whatever reason, you did not earn the 44 credits necessary and/or pass the 5 Regents exams required for a high school diploma. See what your career options are and start making a plan that's right for you. |
High School Diploma or Equivalent
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You've earned a high school diploma but do not attend college. Explore the career options for high school graduates. |
Bachelor's Degree and/or further studies |
You have pursued your studies and earned a bachelor's diploma or greater. Your income is statistically higher but remember, attending college can be VERY expensive, the amount of loans you have will make a big difference in your financial future. |
Step 2: Explore the US Department of Labor website's Occupational Outlook Handbook.
http://www.bls.gov/ooh/
Choose a profession which falls within the education level for your role. Assume that you have been able to save an amount equivalent to 20% of your salary. This will be your investment amount (Assume you have no debt and you were able to save money from the part-time jobs you worked during high school and / or college). Record your profession, salary, and investment amount on worksheet #1.
Step 3: Compare bank savings account rates. Record the name of the institutions along with the APYs on worksheet #1. Then, use the compound interest formula to calculate your savings after 10 years. After 45 years.
Step 4: Find out what it takes to be a millionaire by using the compound interest calculator to answer the corresponding questions on worksheet #1. Experiment with the calculator by inputing various data for the variables (principle, time, or rate).
http://www.1728.org/compint.htm
Step 5: Find three mutual funds having a 10-year average annual return that is greater than the interest rate you calculated on the bottom of worksheet #1. Record this interest rate along with the names of the mutual funds and their 10-year average annual returns on worksheet #2. Use the compound interest formula to estimate returns after 45 years.
Step 6: Talk to someone who understands finance about the benefits and risks of investing in both savings accounts and mutual funds. Then, use the information you have collected from the interview and from this webquest to complete worksheet #3.
Step 7: Prepare a 5- minute oral presentation to present your findings to your classmates.
Evaluation
Your webquest will be worth a total of 24 points based on individual components. Click to view the rubric that will be used to grade your webquest.
Conclusion
This concludes your journey in the attempt to become a millionaire. Through this webquest you have been introduced to the idea of compounding interest. You have seen how the variables of time, principal, and interest rates play an important role in determining how much money you can make by investing. Hopefully you have seen the benefits of saving and investing money early in life and you will be able to apply what you have learned to your own life. Happy investing!
Credits
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