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Chapter 6

Chapter 6. Savings and Investing. Section 1. Why Save?. Section 1 objectives. The SWBAT identify when they should save The SWBAT how passbook, statement, and money market accounts differ The SWBAT describe the advantages of time deposits. Why Save?. Saving

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Chapter 6

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  1. Chapter 6 Savings and Investing

  2. Section 1 Why Save?

  3. Section 1 objectives • The SWBAT identify when they should save • The SWBAT how passbook, statement, and money market accounts differ • The SWBAT describe the advantages of time deposits

  4. Why Save? • Saving • Setting aside income for a period of time so that it can be used later

  5. Deciding to Save • Results of Saving • The whole economy benefits • Provides money for others to invest and spend • Allows businesses to expand, which increases income for consumers and raises the standard of living

  6. Deciding to Save • Where to Save* • Commercial banks, savings and loan associations, savings banks, and credit unions • Interest • The payment people receive when they lend money or allow someone else to use their money*

  7. Deciding to Save • Comparing the best savings plans • Trade-offs • Some plans allow immediate access to your money but pay a low rate of interest • Others pay higher interest and allow immediate use of your money, but require a large minimum balance

  8. Savings Accounts • Passbook savings account • Account for which a depositor receives a booklet in which deposits, withdrawals, and interest are recorded* • Statement savings account • Account similar to a passbook account except that the depositor receives a monthly statement showing all transactions

  9. Savings Accounts • Statement savings account • Main appeal • Offer easy availability of funds* • Money market deposit account • Account that pays relatively high rates of interest, requires a minimum balance, and allows immediate access to money • Trade-off • $1000 to 2,500 minimum deposit; can make withdrawals at any time; only allowed to write a few checks a month

  10. Time deposits • Savings plans that require savers to leave their money on deposit for certain periods of time* • Maturity • The period of time at the end of which time deposits will pay a stated rate of interest* • Certificates of deposit • Time deposits that state the amount of the deposit, maturity, and rate of interest being paid*

  11. Time deposits • Insuring Deposits • Federal Deposit Insurance Company (FDIC) • Created to protect deposits* • Each depositor’s money is insured up to $100,000

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