Miss Smith 7th Grade Civics *pgs. 517-521 Saving and Investing Miss Smith 7th Grade Civics *pgs. 517-521

Savings Accounts Money in savings accounts earn interest Money can be withdrawn when needed Usually must keep a minimum balance and limit withdrawals

Certificates of Deposit (CDs) The longer the money is invested, the more interest you’ll earn What are some options for people who want to save money? They can keep their money with them, or they can put it in a savings account in a bank or in a CD What are the advantages and disadvantages of saving money in a CD rather than a savings account? Advantage: make more money in interest; Disadvantages: penalties for withdrawing money before the end of the specified time

Buying Bonds Bonds are certificates of debt issued by governments and corporations Earn interest When the bond matures/expires, the bond holder gets their money back How is a U.S. savings bond different from other bonds? It does not pay interest until you cash it in when the bond matures, unlike other bonds that pay interest regularly, before the bond matures

Buying Stocks Brokerage houses buy and sell stocks for customers The employees are called brokers Stock exchange- where shares are bought and sold Mutual funds- large number of stocks owned in shares by many people Money market funds- mutual funds that buy short- term bonds Why are stocks a risky investment? A stock may pay small dividends or none at all; its value may rise and sell at a profit, but its value may also fall Why are money-market accounts safer than buying stocks or investing in mutual funds? They use short-term bonds that have stable values, ensuring that you will at least get back the same amount of money that you invested

Saving Helps the Economy Banks use savings to fund the loans they provide This allows businesses to invest in new capital to help their company grow and produce more goods and services When does economic growth occur? When factories and other means of production increase their production How can your savings help a company improve its business? Companies use your savings when they take out bank loans, which they use to expand their business and buy new equipment

Protecting Savings and Investments All financial institutions must receive a state or federal charter to operate What is the job of the SEC? to ensure that all offerings of stocks and bonds on the country’s stock exchanges include accurate information about the company so that purchasers are not misled; to monitor the practices of the country’s stock exchanges and the brokers who buy and sell stock Do you think it is important for the government to supervise savings organizations? Why or why not? Yes- to help protect people’s money; No- people incur the risk of keeping their money at a certain institution