The instructor pointed to an exponential curve on the graph.

Thirty of us sat in the room, listening and studying the magic purple line. I was the youngest there by five years at least. Honestly, I was probably twenty years below the average. There was a lot of experience around me, but my eyes were narrow.

I raised my hand.

“I understand why compound interest is so beneficial,” I said, “but what do you tell clients who’re teenagers or millennials, who’ve never seen a savings account above one percent interest rates?”

The instructor paused, attempting not to shrug. Other coaches looked bored by the idea. Some smirked while my question hung in the air. My brain was churning.

Compound interest is when you get interest, on the interest you earned.

Chew on it for a second.

If you deposit $100 in your savings, the bank will give you a percentage – let’s say you get $1. The next time they give you a percentage, they’re calculating it using $101 instead. The percentage will be bigger, and if you do the math over a long time, it grows to make a significant difference.

This is why earlier generations tell us all about the magic of compound interest. Your money grows without you doing anything. It’s truly great! The problem is, the advice isn’t up-to-date. Here’s why:

If you were born in 1984 or after, chances are your savings interest rates were never that impressive. Since the end of World War II, the federal prime rate (used to set your savings account interest rate) has been at 9 percent on average.

Since 2000, when most millennials opened their first accounts, that number has never reached above 9 percent. And in 2008, it flat lined. Those who opened accounts after the crisis were getting savings rates of 0.02 percent and lower.

In comparison, many people sitting in the room with me had enjoyed 4, 5, and higher from when they were growing up. When people raked in that much cash from banks, compound interest was visible and teachable. Now, in 2018, with rates pulling about 1.5 percent on average, a few bucks a year is all we see.

There’s a lot of reading out there that says interest rates will increase. (The instructor responded to me with that assurance.) Some readers here, from earlier generations, might make the same promise.

I believe rates will probably rise. Whether or not they breach 5 percent before the next market correction is a different story. Understand, that millennials have a different view of things.

For many, since Reagan, we’ve had three meaty financial crises in less than two decades. Before that we only had one, preceding World War II. Repealing Glass Steagall was the cheese, and rolling back Dodd Frank, the ketchup and mustard. That’s a lot for our youngest generation to swallow. Millennials have a feeling about “magic” bank fairy-dust. And we have a right to be cynical:

The inflation rate in the US is running at about 3 percent at the moment, devaluing out cash. Hence, we are losing money every year the savings interest rates are lower. Unless you back-hoe all your assets into an investment account or a five-year CD, compound interest doesn’t mean squat. And unless you have more than $5000 in a savings account, you probably don’t even notice it.

So to those who enjoyed December of 1980, when the prime rate peaked at 21.5 percent, consider that ‘compound interest’ may not be relevant financial advice today (especially for low-income families or millennials earning an entry level wage).

To my fellow millennials, consider what’s important:

1. Use savings accounts with no monthly fees. Interest may give you a little, but these fees will take a lot.
2. Automate your savings. Set up a monthly transfer from your checking account or get your employer to syphon it off direct deposit from your paycheck.
3. Squirrel away money for an emergency in a CD or an investment account. Your main savings vehicle may not beat the inflation rate, but that doesn’t mean some of your money can’t.
4. If you really want to make the magic of compound interest a reality, invest it and then leave it alone for decades, not years.

I listened to the instructor’s answer that day as I put my hand down and the training continued. I approached him when the lesson ended. I expressed my concerns. We agreed compound interest was an important concept, and it did grow your assets.

The bottom line, however, was that millennials see things differently. Until compound interest can show us that magic is real, we’ll continue living in the shadow of 2008, and planning for our future with the practical tools at our disposal.