Saving and Investing

Saving is important to meeting financial goals Best way is to save a fixed amount from every check- have it automatically deposited in savings Be sure to have concrete (SMART) goals for the saving to avoid impulse spending Saving in accounts protects your money and allows you to earn interest on the savings

Types of Savings Savings account: Earn low interest on principal Financial institutions loan the money to others Checking account: Money for purchases Must keep careful records Debit cards allow paperless money transfer

Types of Savings (continued) Money Market: Requires higher minimum balance Many allow check writing (limited) Higher interest rates than savings accounts Certificates of Deposit (CD): Must be left in for a set amount of time Higher rates of return

Investing Investing in stocks and bonds leads to higher returns than other savings Stocks: Shares provide partial ownership in a company Price of share goes up/down based on company performance

Investing (continued) Bonds: Loans money to company or government Pays set rate of interest over several years US government bonds are a very safe investment Mutual Funds: Pools money to invest in different stocks and bonds Chosen by financial experts Less risk than investment in individual stocks

Financial Planning Pyramid Penny Stock Commo- dities Collectibles Speculative Stock / Bonds / Mutual Funds Real Estate Blue-Chip Common Growth Mutual Funds High-Grade Convertible Bonds Preferred Balanced Corporate Bonds or Mutual Funds Municipal Bonds Money Market Accounts Certificates of Deposit U.S. Savings Insured Savings / Checking Accounts Treasury Issues Financial Planning Pyramid Highest Risk Highest Earnings Lower Risk Lower Earnings