Saving and investing strategies help individuals achieve …….?

Personal financial goals

These are the 4 keys to …

1--Debt Free 2--In control of your expenses (income > expenses)3--increasing your savings/assets/net worth on a

monthly basis4--Not being forced to work at a job you dislike

just to pay the bills

Financial security

• individual puts money into account; bank may provide interest payments on a 30 day cycle• Information is tracked in the “passbook”

– a register of deposits and withdrawals• This is….(need the FULL name) • Passbook savings accounts

• Deposit account offered by a bank, which invests in government and corporate securities/stocks and pays the depositor interest based on the current interest rate• Typically: high rate of interest, but also

high level of investment than normal savings • This is…..•Money Market

• Money deposit at a financial institution that cannot be withdrawn for a certain “term” – or period of time

• This is a ……• Certificate of Deposit

• CD vs. Savings : which has the higher return? • CD• CD vs. Money Market: which is better for

emergencies? • Money Market

• As soon as you deposit funds into ……?…., you become a partial owner and participate in the union's profitability.

• Credit Union• What is an advantage to being a member of a

credit union? • Better interest rates

• Unlike banks that are open to anyone, laws require credit unions to have a defined

• field of membership

What’s the difference between a Savings account and a Checking (Debit) Account?

Emergency withdrawals vs. daily expensesWhat organization insures your bank deposits? FDICfull name of FDIC?Federal Deposit Insurance Corporation

• Besides selling a stock at higher price than what you bought it for, how can you increase your income with stocks?

• Dividends• The purchase of stocks is only available

through…..• Brokerage firm

• When you purchase a ___?____, you are lending money to a government or a

corporationBond

Stock vs. Bonds…..which represents ownership ? Stock Stock vs. Bonds…..which has less risk? Why? Bonds – you are guaranteed to get your principle

plus interest….with stocks, you can lose everything

Stock vs. Bonds….which offers higher return? Explain

Stocks – the potential is unlimited….the return on a bonds is fixed

A bond’s “date of maturity” refers to …..– when the principal amount is due When you buy a bond from a company – are you the lender

or the borrower ?What are the three types of investment you purchase from

the US Treasury? 1. Treasury……….2. Treasury……..3. Treasury………Bills , Notes , Bonds

• What is the main difference among the Bills, Notes, and Bonds?

• Length of termWhich one has the longest term? And how long? Bonds – 30 yrsissued by states, cities, counties and other

governmental entities, which use the money to build schools, highways, hospitals, sewer systems, and many other projects for the public good. This is …..

Municipal bond

• One main advantage of a municipal bond vs. other government bonds?

• No taxes on the interest income• debt obligations, or IOUs, issued by private

and public corporations are called…..• Corporate bonds• Corporate vs. Govt. bonds….which has more

risk? And why? • Corporate…..more of a chance for

corporations to default than for governments

• Based on risk factor, which would you expect to offer a better return : corporate or govt. bond?

• Corporate bonds

• A risk management technique that mixes a wide variety of investments within a portfolio.

• diversification

• – offered through brokerage firm which invests contribution along with the contributions of other people = ability to purchase more expensive or larger shares of stocks. This is a…..

• Mutual fund

• often run through insurance companies; you provide funds up front; those funds are invested over time; at a certain date, you begin to receive fixed payment over time with an established termination date…..this is….

• annuity

• is a retirement savings plan sponsored by a publicly owned, non-profit employer…

• 403b• A key advantage to 403 b and 401 k are that

the employer will often……• Match the contribution up to a certain percent

• A general rule for investors is that the older you get,,,your investment choices should be …..

• More conservative…less risk

• $1000 x 10% = $100• $1000 x 10% = $100• $1000 x 10% = $100• $1000 x 10% = $100• $1000 x 10% = $100• after 5 years, you have $1,500 • This is an example of calculating……..• Simple interest

Identify each variable

? ? ? ?