General Business Unit 10 Savings & Investment Strategies Chapter 34 Using Your Savings Plan
Text Book Pg. 466 –Online Auctions Pg. 467 –Focus on Real Life Read Aloud
Regular Savings Acct. Low or zero minimum balance High liquidity –Withdraw when want Pays interest
Saving Acct. Register Record withdrawals & deposit Add interest earned –See how much money in acct. Bank statement shows activity –Check acct. register w/statement Reconcile
Deposit Deposit –Fill out slip –Attach money or check(s) In-person, mail (checks only), ATM (automatic teller machine) EFT (electronic funds transfer) –1 account to another
Withdrawal Slip Written request to take money out of account –Checks if money in acct. to cover withdrawal In-person, ATM, EFT
Money Market Accts. Pays variable interest rate –Based on rates paid to short-term gvt. debt – U.S. treasury bills Reflects interest paid in money markets Large minimum balance –May limit # of withdrawals Yield is higher than reg. Savings acct.
Certificates of Deposit Long-term deposit –Early w/d = loss of interest &/or penalty Pays higher interest Minimum deposit
Certificates of Deposit Certificate indicates: –Amount deposited –Interest rate –Withdrawal date –Penalties for early withdrawal
Computer Time Compare –Fixed CD, Savings Accounts, Checking Accounts –rates and terms from 2 different banks –Wachovia, Commerce, Fidelity, Citizens, Bank of America etc. Which offers the best overall plan today?
IRA Individual Retirement Account (IRA) –Tax-sheltered retirement plan –Invest up to $2,000 annually –Defers tax until retire OR –Pay tax up front & no future tax on gains owed –Tax deductible Up to certain income level
Roth IRA Created in 1997 –Income limits $95,000 individuals or $150,000 for filers of joint returns –Adjusted up each year for inflation –Contributions not deductible No taxes on future gains Grows tax free indefinitely
IRA Retirement plan –Withdrawal prior to 59.5 years old Penalty is 10% on w/d plus Income tax paid on tax-deferred funds
The End Chapter 34