Savings
Explain the difference between a traditional and HYSA savings account. Hint: Explain the benefits and differences!
HYSA is a High Yield Savings Account that generally has a higher interest rate so your money grows faster
Traditional Savings is more common in most big banks but have a low interest rate and does not grow your money as fast
Explain the difference between a credit card and a debit card
A credit card is not your money and it must be paid back every month. If not paid back, you will be charged interest for using the loan. A debit card is like cash and is the best method for practicing budgeting and saving.
What is the S&P 500, and what is the average annual growth?
It measures the top 500 companies in the US and it has an average historically growth rate between 6-10%
What is compound interest?
Interest that is earned over time (a long period of time) that grows on the principal amount of money and the interest earned every month!
What is the difference between gross and net income?
Gross: Income before taxes
Net: Income after taxes
What is a certificate of deposit?
Money put away for a specific amount of time and generally cannot be touched until the maturity date. In some cases there are no-penalty CDs that have no fine.
What is an emergency fund? What amount do experts recommend you save?
An emergency fund should be kept in a HYSA or account that is easier to access. Experts suggest you save 3-6 months in savings based on your expenses.
What are dividends?
Passive income generated from stocks or investments
What is the difference between investors and traders?
Investors are more long-term and hold on to their investments while traders are more short term while trying to beat the market in hopes of getting a quick profit
What is a direct deposit?
A fast method to transfering money from one individual to another
What does it mean when a CD "matures" when dealing with money?
This means that the "contract" between you and the bank has ended and you will recieve your principal amount plus all the interest you have earned
What is the 50/30/20 rule?
This rule is a general way to budget:
50% max for needs
30% for wants (too much in my opinion)
20% for savings and investing
The stock market fluctuates in the short term but tends to increase in the long term, with an average projected growth of approximately 6% per year. Based on what you know about trading and investing, which approach is higher risk? Why?
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“Compound interest is best shown when a person gives their money _______ to grow because the __________ you start investing and saving the more likely you are to see your money grow!”
time, younger
What is the difference between an asset and a liability?
Asset: anything that contributes to growing your financial nest egg
Liability: anything that negatively impacts your financial nest egg
What is the current average interest rate for a HYSA right now?
3-4%
What does it mean to "pay yourself first" when getting income?
Prioritize savings and investing before freely spending your money
What is a stock and an initial public offering? (IPO)
A part of a company and an IPO is the first price of a stock when it goes public
What is a bond?
A bond investment is essentially lending money to a government or corporation, where you act as the lender and they are the borrower, promising to pay you back with regular interest payments (coupons) over a set time, returning your original principal at maturity, offering income and stability compared to stocks.
True or False? Inflation at a rate between 1-2% a year is actually good for economic growth over time.
True, it grows wages over time
What is the average interest rate of a traditional savings account?
0.01-0.05%! EWWWW!
Why doesn't the 50/30/20 rule not always work for everyone?
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Explain the difference between a BULL and BEAR market?
BULL: optimistic and positive about the market
BEAR: negative and pessimistic about the market
Long term investing or short term trading!
Which approach does Mr. G suggest for guaranteed wealth over time? Why?
Long term investing
True or False? The higher the price for a stock or share, the more valuable a company is!
False! The price of a stock does not always relate to the value of a company