accounts
How liquid is a savings account?
Second to highest
Saving
Portion of current income not spent on consumption
Interest
Price of money
Using rule of 72, how many years will it take for Emma to double her month if she is earning a 6% rate of return?
12 years
Different types of cash management tools?
Checking account, savings account, money market deposit account, certificate of deposit, and savings bond
Savings account
Account to hold money not spent on consumption
Interest rate
Percentage rate paid on the money saved or invested expressed as an annual percentage rate
Using the rule of 72, what rate of return is needed for Jimmy to double his investment in 18 years?
4%
Checking account
Tool used to transfer funds deposited into the account to make a cash purchase
Savings bond
Discount bond purchased for 50% of the face value from the US government
Simple interest
Interest earned on the principal (original) investment
What do we assume about Rule of 72? Can we pull interest out? Is it an exact estimate?
We assume its an estimate, interest rate is fixed, and we're not adding or taking away and money. No. No
Money market deposit account
Government insured account offered at most depository institutions
Savings plan
Strategy for putting a portion of money from current income aside, which will not be spent on consumption, to reach a specified goal
Tiered interest rate
Amount of interest earned depends on the account balance
70-20-10 Rule
spend 70%, save 20%, invest 10%
Savings account
Account to hold money not spent on consumption
Checking account
Tool used to transfer funds deposited into the account to make a cash purchase
Taxes
Compulsory charges imposed by the federal government on its citizens and their property
Rule of 72
Formula for figuring the number of years it takes to double the principal using compound interest. Divide percent by 72