Vocab meaning
What is the meaning of savings?
The money you save
The interest paid on the principle
How many months worth of income should you save for emergencies?
6 months
What is the best advice you can receive regarding saving in savings accounts?
Begin saving early
What is rate of return?
The percentage of increase in the value of your savings from earned interest.
Interest paid on the principle and any interest earned on the principle
How much of your income do experts recommend you save?
10%
What are the three types of savings accounts?
Regular savings accounts, Certificate of Deposits, Money market accounts
What is liquidity? Give an example of something that is not liquid.
Liquidity is the ability to quickly turn an investment in to cash, an investment that is not liquid is a car and a house
The risk that inflation rates will rise quicker than interest rates
Inflation risk
You invest $200 in a bank account that pays 3% interest a year, in 2 years you have $212.18. Is the interest paid simple or compounded?
Compounded
What are three reasons people save?
1. To make major purchases
2. To prepare for emergencies
3. To have income for retirement
What is a maturity date? Which type of account is it for?
A maturity date is the day you can withdraw money from a certificate of deposit
What is the account that has high interest rates, but money cannot be withdrawn at any time?
Certificate of deposit
How can you combat inflation risk?
Invest in stock
How does saving benefit the economy?
Saving is vital to the economy, as it assures easy access to loans for people and businesses to produce goods and services for others, expanding business and providing jobs.