Saving and Investing Mr. Mizak Economics Fall 2009

Saving Define: setting aside of income for a period of time so it can be used later Is saving a good thing for an individual? Is saving good for the entire economy? Answer to both = YES When people save, money can be provided for others to invest or businesses to grow

Where can you save? 1) Under your mattress – Pros/Cons 2) Savings bank - Pros/Cons Statement savings account- At the end of each month, individual gets a statement showing all transactions. This is what most people use

Money Market Account- MMDA pays higher rates of indterest – Trade-off = requite 1,000 to 2,500 minimum balance and limited number of checks that can be used per month Time Deposits – Certificates of deposit (CD) offer higher interest rates but money must be left untouched for a set period of time (3 months-8 years)

Is your money safe?

What happened in 1929? After the stock market collapse many peopls’s savings were wiped out. Out of fear, people rushed to the banks to withdrawal all their money Often this would cause banks to fail

FDIC In response, Congress passed the Federal Deposit Insurance Corporation (FDIC) Depositor’s money is protected up to $100,000. If an insured institution fails, each depositor will be paid the full amount of their savings up to $100,000.