💰 Saving Basics
Money set aside for future use.
What is Saving
An investor chooses cryptocurrency because it has the possibility of large gains but could also lose significant value quickly. What financial concept does this demonstrate?
What is risk versus reward?
The money you originally deposit into a savings account.
What is the principle
The possibility of losing money.
What is risk
The money you earn from working.
What is income
This type of fund helps pay for unexpected expenses like a broken phone or car repair.
What is an Emergency Fund
Buying one of these means you own a small piece of a company.
What is a stock
Money earned for allowing a bank to use your money.
What is interest
The potential benefit of taking a financial risk.
What is reward
Money spent on goods or services.
What is an expense?
This is the habit of saving money before spending it on wants.
What is pay yourself first?
This investment combines many different stocks or bonds into one investment.
What is a mutual fund
Interest earned on both your original money and previously earned interest.
What is compound interest
Spreading your money among different investments is called ______.
What is diversification
A collection of investments owned by one person.
What is a portfolio?
A goal that might take only a few months to achieve.
What is a short term goal
Name the investment that usually has the highest risk because prices change dramatically.
What is cryptocurrency?
Which grows faster over time: simple interest or compound interest?
What is compound interest?
Why is diversification important?
It helps reduce investment risk because not all investments perform the same.
The increase in value of an investment over time.
What is appreciation?
Name two reasons why people save money.
Future purchases, emergencies, college, vacations, retirement, etc.
Which investment generally offers a fixed interest rate and is insured by a bank?
What is a Certificate of Deposit (CD)?
Explain why starting to save when you're younger is beneficial.
More time allows compound interest to grow your money.
Place these from lowest risk to highest risk:
CD
Stock
Crypto
Mutual Fund
CD → Mutual Fund → Stock → Cryptocurrency
Someone who puts money into stocks, mutual funds, or real estate hoping it will grow.
Someone who puts money into stocks, mutual funds, or real estate hoping it will grow.