1. UNIT VII – Personal Financial Literacy
Saving and Investing
UNIT VII – Personal Financial Literacy

2. Saving Your Money Save early Save often
Pay yourself first (make it a fixed expense)

4. Types of Savings Accounts
Definition
Return
Standard Savings Account
Certificates of Deposit
Money Market Accounts
U.S. Savings Bonds
Accounts at a bank, savings association, or credit union
Rates are relatively low
Bank notes for a set period of time at a fixed interest rate
Rates are usually higher
Savings accounts offered by banks that require a high minimum balance
Rates are usually higher
Government issues bonds as one of its ways of borrowing money
Rates are usually higher

5. Saving and Risks Multiple ways to save money
The more risk you take, the higher the interest rate will be
It is important to DIVERSIFY your savings – “Don’t put all your eggs in one basket.”

6. Investments
Stocks – partial ownership of a business can give you steady returns (dividends) and go up in value to give you more money
Bonds – lending money to a company or government to gain interest. Low risk, but low earnings
Mutual Funds – a variety of high risk stocks with low risk bonds makes this choice less risky.

8. Pyramid of Risk Speculative Stocks Real Estate / Collectibles
Individual Stocks
Mutual Funds
Certificates of Deposit
Savings Accounts
U.S. Savings Bond

9. Compounding Interest
Money is really made by interest adding up over time
Example: 8% interest will give $2160, the next year it would be $ which is only $12.80
But if you saved $2000 a year plus the interest from 22 to 65 you would ultimately end up with $713,899 instead of $86,000