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Saving

Saving. HOW IT WORKS, WHY IT WORKS AND WHEN YOU SHOULD START DOING IT!!!!!. Saving. Storing money for future use. . WHY Save???. Save for…. MAJOR PURCHASES EMERGENCIES RETIREMENT. Types of bank savings accounts/Plans. Traditional Savings Account Certificate of Deposit

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Saving

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  1. Saving HOW IT WORKS, WHY IT WORKS AND WHEN YOU SHOULD START DOING IT!!!!!

  2. Saving • Storing money for future use.

  3. WHY Save???

  4. Save for… • MAJOR PURCHASES • EMERGENCIES • RETIREMENT

  5. Types of bank savings accounts/Plans • Traditional Savings Account • Certificate of Deposit • Money Market Account

  6. Advantages to saving at a bank • Interest!!!!! • Safe • Insured by the FDIC • Liquid

  7. Who is this guy??????

  8. Compound interest • Compound Interest – Concept of adding accumulated interest back to the principal. • Earning interest on principal and interest!!!!!

  9. Principal • The amount you deposit.

  10. Liquid • Ability to quickly get your cash!

  11. Maturity Date • When the $ becomes available to you.

  12. Opportunity Cost • Sacrifice of what you give up when you make a choice. • Examples???

  13. FDICFederal Deposit Insurance Company • Bank’s Insurance Company. • Your money is insured up to $250,000 PER BANK.

  14. Traditional savings account • Put money in, take money out whenever you want. Earns a LITTLE amount of interest. • Everyone needs a traditional savings account for emergencies and short term goals.

  15. Certificate of deposit • Put in a set amount of money. • Leave the money in for a set period of time. • Cannot add money to the CD • Earns more interest than a regular savings account. The longer you are willing to leave it in the higher the interest rate. • If you take the money out early, may face a penalty and will not get the benefit of the interest.

  16. Money market account • Usually need more money to open the account ($2,000, $5,000). • Can write usually 3 checks per month out of this. • Earns a little more interest than a regular savings account but you must maintain the balance.

  17. How does compound interest work????? Dave invests $1,000 in a fixed savings account at 5% interest compounded annually. He decides to leave the money in for five years. What will be the balance in his account after five years? Year One $1,000 x .05 = $50 Year Two $1,050 x .05 = $52.5 Year Three $1,102.50 x .05 = $55.13 Year Four $1,157.63 x .05 = $57.89 Year Five $1,215.53 x .05 = $60.78 Total after five years $1,276.31

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