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Consumer Credit & Investments Opposite sides of the same coin.

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Presentation on theme: "Consumer Credit & Investments Opposite sides of the same coin."— Presentation transcript:

1 Consumer Credit & Investments Opposite sides of the same coin

2 One side of the coin is….. Credit

3 The other side is …. Investment

4 Credit has two general types Secured credit Like a mortgage or an installment loan Unsecured credit like a credit card

5 Secured credit has collateral… Collateral is something of value that can be taken back if the loan is in defaultnot paid back

6 Unsecured credit is issued on your good credit rating only Your credit rating affects how much you can borrow, what your interest rate will be and how long you can borrow the money for. All based on your credit history of managing your credit in the past– your image in other words

7 Risk Reward for both Credit & Investment Credit greater risk = higher interest rates Investments greater the risk = the higher the potential reward

8 Money is like water: the flowage rate is related to the temperature More liquid = easier to spend (turn into) like cash: it really flows fast Less liquid (or frozen in a long-term investment) more difficult to turn back into cash & spend


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