CHAPTER 7: SAVING AND INVESTING

Why Save Money

BRAINSTORMING ACTIVITY

Your grandparents just gave you $10,000 as a reward for your good behavior and accomplishments up to this point in your life. Write a paragraph telling me specifically what you will do with this money. In other words, how will you use this money?

WHY SAVE?

Saving: The nonuse of income for a period of time so it can be used later

In Case of Emergency Retirement Savings benefits the economy:

Provides money for others to invest and spend Allows business expansion Interest: Payment for saving

Someone else is using your money

TYPES OF SAVINGS

Savings Accounts: Passbook or Regular Savings Account: present

passbook before transaction Statement Savings Account:

Monthly statement comes in the mail Very convenient: withdraws are easy – Debit card

Money Market Deposit Account Higher interest rates, easy access Higher minimum balance required Limited number of checks can be written per month

TYPES OF SAVINGS

Time Deposits: Deposit money, can’t touch it until

maturity Maturity: Time period money must be

untouched Can vary from 7 days- more than 8 years

Certificate of Deposit (CD’s): Longer the maturity time, higher the interest Banks sell these to bring in Funds

INSURING DEPOSITS

Reform on Deposit Insurance after 1929

FDIC: Federal Depository Insurance Corporation Today, Accounts are guaranteed up to

$250,000