STOCK-BASED MUTUAL FUNDS STOCKS BONDS STOCK-BASED MUTUAL FUNDS Potential Return BOND-BASED MUTUAL FUNDS Certificates of Deposit Savings Accounts Potential Risk

Building Wealth. Saving and Investing The farther up or across the arrow: the greater the risk or reward.   Label your Graphic Organizer Interest rates: the cost of borrowing money.  Interest rates are normally expressed as a % of the total borrowed,  Example: for a 30-year mortgage, a bank may charge 5% interest per year. Interest rates also show the return received on saving money in the bank or from an asset like a government bond. Borrowers like low int. rates.  Investors like high int. rates.

Savings Accounts Almost no risk (FDIC: up to $250K protected) High Liquidity Very low interest rates --> low reward

Certificates of Deposit AKA: CDs/Time Deposits $ invested and cannot be touched until it "matures"  Interest rates are higher than savings, but still low Very low risk Penalties for pulling out money before maturity date.  Less liquid than Savings/Checking Accounts

https://www. franklintempleton https://www.franklintempleton.com/investor/resources/tools/education/what-is-a-mutual-fund Mutual Funds

Mutual Funds Long term investments (retirement, college fund) Use diversification to minimize risk

Mutual Funds Bond-Based Mutual Funds Mix of Corporate and Government bonds (Federal, State, Municipal) Lower Risk than stock based bonds --> lower reward too Stock-Based Mutual Funds Mix of high and low risk stocks Higher risk/reward than bond based

Bonds Corporate -> higher risk/reward Some corporations are riskier than others Government -> Lower risk/reward Federal bonds the most secure

Stocks Highest risk/reward Some riskier than others