INTEREST & RISK OF RETURN Notes. WHAT IS INTEREST?  Interest is money earned on an investment OR the money you pay for borrowing someone else’s money.

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Presentation transcript:

INTEREST & RISK OF RETURN Notes

WHAT IS INTEREST?  Interest is money earned on an investment OR the money you pay for borrowing someone else’s money (loan or credit card).  Investment interest is a “THANK-YOU” from your bank for saving your money with them.  INTERNET SEARCH:  Go to the website for a commercial bank or credit union. Find RATES and compare current interest.

THE GROWTH OF SAVINGS Simple Interest  Interest is paid at period times based on amount invested.  Does not grow (compound) on top of previous interest. Principal X Interest Rate X Term of the loan Compound Interest  “interest on interest”  will make a deposit or loan grow at a faster rate than simple interest  Google Compound Interest Calculator

GROW YOUR MONEY FASTER!

WHO WANTS TO BE A MILLIONARE? Use SAVINGS games to learn about what makes a millionaire and how compound interest can help you get there.