Saving & Investing Chapter 6. WHY SAVE? Chapter 6 – Section 1.

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Presentation transcript:

Saving & Investing Chapter 6

WHY SAVE? Chapter 6 – Section 1

Main Idea: Savings consist of income set aside for future use. How does that benefit YOU (the individual)? A person receives interest on a savings plan for as long as the funds are in the account. How does that benefit THE ECOMONY? – It provides funds for others to invest or spend. – It allows businesses to expand, which provides increased income for consumers and raises the standard of living.

Trade-Offs Some savings plans allow immediate access to your funds but pay a low rate of interest. Others pay higher interest and allow immediate use of your funds, but require a large minimum balance.

Savings Accounts Savings Account ~ Account that pays interest, has no maturity date, and from which funds can be withdrawn at any time without penalty. Money Market Deposit Account (MMDA) pays relatively high rates of interest, requires a minimum balance of $1,000 to $2,500, and allows immediate access to funds.

Time Deposits require savers to leave their funds on deposit for certain periods of time, or maturity. Time deposits are often called certificates of deposit (CDs), or savings certificates. certificates of deposit

Insuring Deposits After the stock market crash of 1929, the Federal Deposit Insurance Corporation (FDIC) was created to protect peoples’ funds. Insures up to $100,000 for each separate account 1/1/2011 that will adjusted for inflation

Money Now or Later

Review (or Bell Ringer): Advantage Disadvantage Access Any Time Lower Interest Higher Interest Time Deposit Best Interest High Deposit Needed

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