1. Savings Day 2

2. Important Rule: Absolute Silence!
Shhhhhh!!!!
OBJECTIVE
Students will be able to…
Explain why there is government regulation in banking
Determine the value of compound interest
AGENDA
Book Club
Review Last Class
Calculating Interest
Types of Savings Accounts
To start class today, we’re going to do something a little different. Get an article from Mr. Bird and begin reading it, he’ll explain everything else when the time comes!
Important Rule: Absolute Silence!

3. Book Club!

4. Quick Announcement
Old note papers are getting dumped at the end of the day! If you want them, get them before then!

5. Banks Credit Unions For-profit companies owned by shareholders
Not-for-profit institutions owned and controlled by their own customers, who are known as members
Managed by a paid board of directors elected by the bank’s shareholders
Managed by a member and volunteer board of directors, who are elected by other members
Offer their services to everyone; anyone can become a customer
Offer their services to special groups of people and may be employer-, church-, community-, or alumni-sponsored (among others); customers must qualify for credit union membership through their membership with these special groups of people

6. Profits benefit a small group of stockholders
Banks
Credit Unions
Owned by shareholders; customers do not have ownership or voting privileges unless they also own stock in the bank
Owned by each credit union member, who has equal ownership and one vote, regardless of how much money a member has on deposit
Profits benefit a small group of stockholders
Profits are returned to members in the form of lower fees and loan rates and higher interest on deposits
Accounts are federally insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC)
Accounts are federally insured up to $250,000 by the National Credit Union Administration (NCUA)

7. The Federal Reserve “The Bank’s Bank” a.k.a. “The Fed”
Determines the interest rate
Influences the amount of money in circulation through treasury bonds

8. The FDIC Federal Deposit Insurance Corporation
Insures up to $100,000 of your account
Why would they make this?
Stopped runs on the bank

9. The NCUA The National Credit Union Association
The FDIC for credit unions

10. Money Over Time - Price of Groceries
Item
1976
2016
Milk (quart)
.60
.70
Eggs (dozen)
.75
1.68
Bread (pound)
.35
1.98
What percent change is that?

11. Money Over Time - Calculating Interest
Is time on our side?

12. An Interesting Problem
To further observe the effects of compounding interest, imagine we have two people who start saving for retirement.
Person A invests $2,000 at age 30 and then makes a monthly contribution of $200 until age 65; the account has an annual interest rate of 4.5%. Person B executes the same plan, but begins at age This means she only has 25 years of investing compared to person A’s 35 years. While ten years may not seem like much, in terms of compound interest, it is.
Using the simulator, determine how much her delay of ten years will have cost person B when she retires.

13. Types of Savings Accounts- Jigsaw
Information to find about your account:
Definition
Liquidity (how easy it is to access your money)
Any regulations placed on you for using the account