Saving Basics
What is the main objective of saving?
→ Maintaining liquidity and meeting short-term financial needs
What is the main goal of investing?
→ To beat inflation and grow wealth
Which comes first: saving or investing?
→ Saving
Goals achieved in less than a year are called what?
→ Short-term goals
What is interest?
→ A reward for lending money
What federal program protects deposits in savings accounts?
→ FDIC (Federal Deposit Insurance Corporation)
Buying gold and holding it for years is an example of what?
→ Investment
Why does money lose value if only saved and not invested?
→ Inflation
Name one short-term savings goal.
→ Vacation, emergency fund, furniture
Name the two main types of interest.
→ Simple and compound
Name one option for saving money with a fixed maturity date and fixed interest.
→ Certificate of Deposit (CD)
What two factors should investors always consider?
→ Risk and volatility
True or False: Without savings, you cannot invest; without investing, savings lose value.
→ True
Buying a car or paying off student loans fits into what type of goal?
→ Medium-term goal
Which type of interest grows faster?
→ Compound interest
True or False: Savings accounts usually allow you to write checks.
→ False
Investments usually fulfill which types of goals?
→ Intermediate- and long-term goals
Both saving and investing help reduce what?
→ Financial worries/stress
Retirement savings and college funds are examples of what kind of goals?
→ Long-term goals
Which account earns a higher rate than standard savings but often requires a larger deposit?
→ High-yield bank account
What savings plan authorized by Section 529 helps families pay for college?
→ 529 Plan (Qualified Tuition Plan)
Name one investment vehicle for retirement.
→ 401(k), Roth IRA, bonds, investment properties
What financial principle makes your money “grow money”?
→ Compounding
: What employer-sponsored plan helps employees save for retirement?
→ 401(k)
Which savings vehicle is NOT FDIC insured but invests in low-risk securities?
→ Money Market Fund