MATH STUDENTS TEST THEIR FINANCIAL INSTINCTS ON SPENDING VS. INVESTING
Mathematics Department Chair Mr. Jason Bratten's students were given a hypothetical situation in class this week, "What would you do if you were given $50,000?" Students from Mr. Bratten's Honors Geometry with Statistics and Vectors course were asked to choose form one of three options: (1) buy a car; (2) commit the $50,000 into a low-risk investment vehicle in the short term and then use the money for a down payment on a house; or (3) invest the $50,000 long-term for retirement. Students individually made their financial investment decisions from choosing which car make and model they wanted, to which house they'd like to purchase, to which stocks to invest their money into. They also randomly generated their own individual return on investment and, as a result, each student's decision was solely based on their own financial instincts. They also worked collaboratively to decide which mathematical concepts or methods to apply in order to correctly analyze their investment outcome.
Students used their knowledge of logarithmic functions to analyze and investigate concepts like appreciation and depreciation of assets over time, real estate market growth and decline, and stock market trends. "Embedded in this assignment are real-world concepts like credit scores, taxes, closing costs and private mortgage insurance, and this assignment proves how they impact one's spending power," says Mr. Bratten. "Mastery of the more traditional mathematical concepts like simple interest, compound interest, continuously compounding interest, and exponential growth and decay is also necessary in order to correctly analyze each financial option."
Mr. Bratten's students will continue to work on this project throughout this course as they determine whether or not their hypothetical investments were financially successful. "St. Ed's goal to teach to the future is centered on preparing our students for the world they will encounter. How we set ourselves up for our financial futures revolves around our understanding of how interest affects the money we spend or invest," says Mr. Bratten. "The biggest takeaway from this assignment for my students was better understanding the power of compound interest over time and the role that randomness (events outside of their own control) plays in their finances. The students have enjoyed the real-world application of the concepts they're learning, but also that they were given the power to make their own decisions about the level of risk they wanted to take."