Chapter 10 Saving for the Future

Why Save?? Short-term needs: – – – – –

Why Save? Long-term needs: – – – –

Financing Your Education How to pay for college? –Work - –Scholarships –Student loans – –Grants – –Work-study Programs –

How much to save? How much you can save is based on: 1.Discretionary income – 2.The __________ you attach to saving 3.Your anticipated ________________ 4.Your ___________

Keys to Saving

How your money grows Principal – Interest – Compound Interest –

How your money grows The ______ _____interest in compounded, the ________ your earnings. Yield – Annual Percentage Yield -

Where to save ________________ – chains; usually “full service;” FDIC insured __________________________ – specialize in savings accounts and real estate loans; FDIC insured ______________– Not-for-profit, member owned institutions; “share accounts;” NCUA insured _________________ – offer securities (stocks and bonds); Not FDIC insured

Regular Savings Accounts Liquidity – Tradeoff? You are free to make deposits and withdrawals without penalty.

Certificate of Deposit Certificate of Deposit (CD) – Maturity date – __________ must be paid if money is withdrawn _______ Rates are ______ than a savings account b/c _____ __________

Money Market Account Money market account – Offered by ______ and ________________ ______ _______ but often limited to a certain number of withdrawals per month Usually require large _______ ______ and high ___________ ___________

Money Market Accounts MM Deposit Account Offered by ______ Higher rate for higher deposits Rate can ________ as account balance increases ________ insured MM Fund Offered by __________ ______ Type of mutual fund that invests in low-risk securities Risk of loss of principal ___ _____insured

Factors to consider when saving - First Niagara- Wells FargoFirst Niagara

Saving Regularly It is important not just to save, but to save regularly. Direct Deposit - Automatic Payroll Deductions –