Investing
A _____ represents partial/shared ownership of a company.
A stock, also known as equity, represents partial/shared ownership of a company.
Why is it important to have a savings account?
Unexpected expenses
True or False:
Bank accounts are not safe?False! Bank accounts are very safe!
They are both backed by an insurance agency, banks have the FDIC, or the Federal Deposit Insurance Corporation, an credit unions have the NCUA, National Credit Union Administration. Both of these insurances will cover up to $250k.
______ is when you make different types of investments to reduce risk.
Diversifying is when you make different types of investments to reduce risk.
True or False:
You do not earn interest on a savings account
False:
A majority of savings accounts do earn interest, the rate however varies
True or False:
Credit Unions do not pay taxes
True!
They are technically a non-profit and do not have to pay taxes, which helps members gain more benefits
Should you take out your investments after 5 years?
No!
Remember you are playing the long-game you want to keep investments for long-term because they have the ability to earn compound interest
How do savings help you achieve the life you want to live?
They ensure you can pay cash for unexpected expenses instead of having to accrue interest on a credit card
What are 3 things you'll need to open a bank account?
ID, Social Security, Proof of address, MONEY!
Do investments get taxed?
Yes! It is considered taxable-income, this is another reason to keep the money in there for a longer period of time.
How many savings accounts is it recommended to have?
One for unexpected expenses and the other for funsies stuff!
Which baking institution will give you more banking options?
Traditional banks, this is why its important to research benefits of each bank, if you want lower interest rates credit unions may be for you, if you travel a lot then a traditional bank may be better
Explain Compound Interest
Compound interest is the interest you earn on interest. Ex: if you have $100 and it earns 5% interest each year, you'll have $105 at the end of the first year. At the end of the second year, you'll have $110.25.
What action is savings considered?
It is delayed gratification! By not spending your money and leaving it alone you are putting of the dopamine rush for a better bigger one later
What are the 5 rules of banking?
1. Do not overdraw your account
2. Keep the requires minimum savings balance
3. Set Up Alerts on Suspicious Activity
4. Set Up automatic payments
5. Pay yourself first