### 6.4 Savings & Retirement Plans

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• Math Help

The interest rates used in Chapter 6 are mainly for illustrative purposes and do not necessarily reflect what is currently available in the U.S. marketplace. You can use an online resource, such as bankrate.com, to investigate current rates.

To find a balance compounded monthly using your calculator, apply the following steps for the formula

1. Divide r by 12 and add 1.
2. Raise to the nth power.
3. Multiply by P.
4. Round to the nearest cent.

On page 284, the formula for the account balance is for interest compounded monthly. The formula for quarterly compounding is

where n is the number of quarters the interest is compounded. (Note that 3 months = 1 quarter.) The formula for daily compounding is

where n is the number of days the interest is compounded. The formula for annual compounding is given in the Math Help for page 285.

• Consumer Suggestion

If you have kids or plan to have kids in the future you might want to consider purchasing a 529 plan for your child's college expenses. The money you deposit into a 529 is exempt from federal taxes as long as it is used to pay for college expenses such as tuition, or room and board. To learn more about 529 plans, visit the Securities and Exchange Commission website.

• Checkpoint Solution
1. The balance on her 18th birthday is

2. The balance on her 26th birthday is

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