1. SAVING –BORROWING- CREDIT WHY SAVE?????

2. PERSONAL SAVINGS Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan.[1]pension[1]

3. FYI Saving also includes reducing expenditures, such as recurring costs. In terms of personal finance, saving specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is higher.personal finance deposit accountinvestment

4. capital gain A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price.profitcapital asset

5. FYI It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.[1] Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.[1]capital loss

6. LIQUIDITY In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay his debts as and when they fall due. It is usually expressed as a ratio or a percentage of current liabilities.accounting debtorratiopercentageliabilities

7. SAVINGS ACCOUNT Savings accounts are accounts maintained by retail financial institutions that pay interest but can not be used directly as money ( for example, by writing a cheque). These accounts let customers set aside a portion of their liquid assets while earning a monetary return.financial institutionsinterestmoneycheque

8. COMPOUND INTEREST Compound interest arises when interest is added to the principal, so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the principal is called compounding.interest

9. FYI A bank account, for example, may have its interest compounded every year: in this case, an account with $1000 initial principal and 20% interest per year would have a balance of $1200 at the end of the first year, $1440 at the end of the second year, and so on.

10. MONEY MARKET ACCOUNT A money market account (MMA) or money market deposit account (MMDA) is a deposit account offered by a bank, which invests in government and corporate securities and pays the depositor interest based on current interest rates in the money markets.[1]deposit accountbanksecuritiesmoney markets[1]

11. M M A Money market accounts typically have a relatively high rate of interest and require a higher minimum balance to earn interest or avoid monthly fees. The resulting investment strategy is therefore similar to, and meant to compete with, a money market fund offered by a brokerage, which is considered almost as safe as savings[citinterestmoney market fundbrokeragecit

12. CERTIFICATE OF DEPOSIT Investopedia explains Certificate Of Deposit - CD A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty. certificate of deposit

13. FYI For example, let's say that you purchase a $10,000 CD with an interest rate of 5% compounded annually and a term of one year. At year's end, the CD will have grown to $10,500 ($10,000 * 1.05). CDs of less than $100,000 are called "small CDs"; CDs for more than $100,000 are called "large CDs" or "jumbo CDs". Almost all large CDs, as well as some small CDs, are negotiable.interest rate

14. HOME MORTGAGE Investopedia explains Home Mortgage Home mortgages allow a much broader group of citizens the chance to own real estate, as the entire sum of the house doesn’t have to be provided up front. But because the lender actually holds the title for as long as the mortgage is in effect, they have the right to foreclose the home (sell it on the open market) if the borrower can’t make the payments.real estate

15. FYI A home mortgage is one of the most common forms of debt, and it is also one of the most advised. Mortgage loans come with lower interest rates than almost any other kind of debt an individual consumer can find.interest rates

16. AMORTIZATION What Does Amortization Mean? 1. The paying off of debt in regular installments over a period of time. 2. The deduction of capital expenses over a specific period of time (usually over the asset's life). More specifically, this method measures the consumption of the value of intangible assets, such as a patent or a copyright.asset's

17. FYI Investopedia explains Amortization Suppose XYZ Biotech spent $30 million dollars on a piece of medical equipment and that the patent on the equipment lasts 15 years, this would mean that $2 million would be recorded each year as an amortization expense. amortization

18. Amortization Schedule Mean? What Does Amortization Schedule Mean? A complete schedule of periodic blended loan payments, showing the amount of principal and the amount of interest that comprise each payment so that the loan will be paid off at the end of its term.

19. FYI Early in the schedule, the majority of each periodic payment is interest. Later in the schedule, the majority of each periodic payment is put toward the principal.

20. 3 C’S OF CREDIT Character: From your credit history, a lender may decide whether you possess the honesty and reliability to repay a debt. Considerations may include: Have you used credit before? Do you pay your bills on time? How long have you lived at your present address?

21. CREDIT 3 C’S How long have you been at your present job? Capital: A lender will want to know if you have valuable assets such as real estate, personal property, investments, or savings with which to repay debt if income is unavailable.

22. 3 C’S CREDIT Capacity: This refers to your ability to repay the debt. The lender will look to see if you have been working regularly in an occupation that is likely to provide enough income to support your credit use.

23. 5 C’s of credit The five key elements a borrower should have to obtain credit: character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).elementsborrowercreditcharacterintegrity capacitycash flowservice obligationcapitalnet worthcollateralassetssecuredebtconditionseconomy

24. bonds InvestorWords.com bond Hide links within definitions Show links within definitions Definition A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The Federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity).debt instrumentperiodcapitalborrowingFederalgovernmentcorporationsinstitutionssellpromiserepayprincipalwith interestmaturity

25. US savings bond A registered, non-callable, non- transferable bond issued by the U.S. Government, and backed by its full faith and credit. Savings bonds differ from other Treasury securities in several ways. U.S. Savings Bonds are non-marketable, meaning that they cannot be bought and sold after they are purchased from the government; therefore, there is no secondary market for savings bonds.registerednon-callablebondU Governmentfull faith and creditSavings bonds Treasury securities Savings sold secondary market

26. US SAVING BOND The tax benefits associated with savings bonds are significant. Like all treasury securities, they are exempt from state and local taxes, but in the specific case of U.S. Savings Bonds, all federal taxes may be deferred until the bond is redeemed.taxbenefits securitiesexempt localtaxesfederal

27. CORPORATE BOND InvestorWords.com corporate bond Definition A type of bond issued by a corporation. Corporate bonds often pay higher rates than government or municipal bonds, because they tend to be riskier.bondcorporation Corporatepayratesgovernmentmunicipal bonds InvestorWords.com corporate bond Hide links within definitions Show

28. FYI The bond holder receives interest payments (yield) and the principal, usually $1000, is repaid on a fixed maturity date (bonds can mature anywhere between 1 to 30 years). Generally, changes in interest rates are reflected in bond prices. Bonds are considered to be less risky than stocks, since the company has to pay off all its debts (including bonds) before it handles its obligations to stockholders.holderinterest paymentsyieldprincipalfixedmaturity datechangesinterest rates stockscompanydebtsobligationsstockholders

29. PRINCIPAL The amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest). here also called principal amount. 2. The part of a monthly payment that reduces the outstanding balance of a mortgage. 3. The original investment.amountinterest principal amountpaymentoutstandingbalance mortgageoriginalinvestment

30. INTEREST 1. The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate. Here, interest per year divided by principal amount, expressed as a percentage. also called interest rate. 2. The return earned on an investment. 3. Partial or total ownership in an asset.feechargedlenderborrowermoneyannualpercentageprincipal ratedependenttime value of moneycredit riskinflation rateperprincipal amount interest ratereturninvestmentownershipasset

31. MUTUAL FUND An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public.open-endedfund investment companymoneyshareholdersinvestsgroupassetssetobjectivesfundsraise sellingpubliccompany sellstock

32. FYI Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments.take receivesalepurchaseinvestmentbondsmoney market instruments

33. REAL PROPERTY Real property and personal property are the main classifications of property in the common law.personal propertyproperty common law

34. FYI Real property refers to land and the improvements made by human efforts— buildings, machinery, the acquisition of various property rights, and the like. Real property is also termed realty, real estate, and immovable property.landreal estateimmovable property

35. CREDIT CARD Any card that may be used repeatedly to borrow money or buy products and services on credit. Issued by banks, savings and loans, retail stores, and other businesses. borrowmoneybuyproducts servicescreditbanks savings and loansretailstores businesses

36. APR Investopedia explains Annual Percentage Rate - APR Loans or credit agreements can vary in terms of interest-rate structure, transaction fees, late penalties and other factors.credit

37. FYI A standardized computation such as the APR provides borrowers with a bottom-line number they can easily compare to rates charged by other potential lenders.

38. APR By law, credit card companies and loan issuers must show customers the APR to facilitate a clear understanding of the actual rates applicable to their agreements.

39. FYI Credit card companies are allowed advertise interest rates on a monthly basis (e.g. 2% per month), but are also required to clearly state the APR to customers before any agreement is signed. For example, a credit card company might charge 1% a month, but the APR is 1% x 12 months = 12%.interest rates

40. FYI This differs from annual percentage yield, which also takes compound interest into account.

41. CHARGE ACCOUNT charge account Hide links within definitions Show links within definitions Definition Trade credit facility under which goods are delivered or services are provided to creditworthy customers, who agree to pay for them a certain period (commonly 30 days) after the date of invoice.Trade creditfacilitygoodsservices creditworthycustomerspayperioddaysinvoice

42. FYI Each customer normally has a 'credit limit' beyond which goods or services are provided only on cash basis. Tardy customers may have to pay a certain rate of interest on the outstanding amount as a penalty. Also called credit account. See also open account.credit limitcash basisrate of interestoutstandingamount penaltycredit accountopen account

43. PERSONAL LOAN personal loan Hide links within definitions Show links within definitions Definition Consumer loan granted for personal (medical), family (education, vacation), or household (extension, repairs, purchase of air conditioner, computer, refrigerator, etc.)Consumer loangrantedfamilyeducation householdextensionrepairspurchasecomputer

44. FYI use, as opposed to business or commercial use. Such loans are either unsecured, or secured by the asset purchased or by a co-signor (guarantor). Unsecured loans (called signature loans) are advanced on the basis of the borrower's credit-history and ability to repay the loan from personal income.business commercialloans unsecuredsecuredassetguarantor Unsecured loanssignature loans borrower'scredit-historyability repaypersonal income

45. FYI Repayment is usually through fixed amount installments over a fixed term. Also called consumer loan. amountinstallmentsconsumer

46. COLLATERAL What Does Collateral Mean? Properties or assets that are offered to secure a loan or other credit. Collateral becomes subject to seizure on default.credit

47. FYI Collateral is a form of security to the lender in case the borrower fails to pay back the loan. For example, if you get a mortgage, your collateral would be your house. In margin trading, the securities in your account act as collateral in the case of a margin call.margin

48. FDIC What Does Federal Deposit Insurance Corporation - FDIC Mean? The U.S. corporation insuring deposits in the U.S. against bank failure. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.banking

49. FYI The FDIC will insure deposits of up to US$250,000 per institution as long as the bank is a member firm.

50. CHECKING ACCOUNT Investopedia explains Checking Account Checking accounts are offered by most banking institutions for a minimal fee or no fee at all. Thanks to advances in electronic banking, many people can now use checking accounts to set up automatic payment of routine monthly expenses with a one-time setup. automatic payment

51. FYI For the large commercial banks, checking accounts are considered loss leaders because they have become highly commoditized (hence the low fees for their use). The goal of most banks is to entice the customer to use more profitable features such as personal loans, mortgages and certificates of deposit (CDs). accounts

52. FYI Because money held in checking accounts is so liquid, aggregate balances nationwide are used in the calculation of the M1 money supply.