1. Interest and Investment
“Make dat money…”

2. Interest: What you need to know
Interest- is the cost of credit
Principal-is the amount borrowed
Collateral-property that is used to secure a loan
Finance Charge-the amount of interest paid stated in a dollar amount
Prime Rate-is the interest rate charged by major banks to their “best customers”

3. Good vs. Bad Interest Good Interest Bad Interest
Money that the bank pays you for some type of investment
Bad Interest
Money that you owe a bank for borrowing from them (a loan)

4. Investments
Why would people choose to engage in risky behavior with money?
To make their investment grow
What is an investment?
Way to make/save money

5. Four Factors Tied to Investments
Safety
Reward
Ease of getting cash
Ease of opening an account

6. Investments: Things to Know
Investment Return
The money you make off the interest
Maturity
Fixed amount of time needed to make the interest accumulate
FDIC
Federal deposit insurance corporation which insures up to $250,000 of your money
Risk
The uncertainty that you will receive the expected return

7. Five Types of Risk 1. Financial Liquidity Fraud Market Price Inflation
No return
Liquidity
Ability to get to your money
Fraud
You become the victim
Market Price
Prices will drop
Inflation
Money looses value

8. Pyramid of Risk and Reward
“The higher the risk, the higher the potential reward”
Stocks
Real estate
Bonds
Savings