MBF3C Lesson #6: Saving Alternatives

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Presentation transcript:

MBF3C Lesson #6: Saving Alternatives PERSONAL FINANCE MBF3C Lesson #6: Saving Alternatives

In order to achieve your financial goals, you will need to save money In order to achieve your financial goals, you will need to save money. If you are thinking of buying a car, saving for college, or getting your own place, understanding savings alternatives will help you get closer to meeting your goals.

Savings Accounts From Financial Institutions (p. 462) You can save your money in many places. Copy and complete the table to compare the interest rate earned on $1000 deposited in savings accounts from three financial institutions (for example, a bank, a credit union, and an Internet bank). 2. Some institutions charge fees to customers for providing different services while some do not. Research the fees, if any, associated with each account chosen in question 1. Then copy and complete the table A service charge is a fee charged by a financial institution for providing services. A transaction is any activity that occurs within an account. For example, paying a bill or withdrawing cash.

Interest Earned on Accounts Example 1 Interest Earned on Accounts Jodie received $530 from family members for her birthday. She plans to buy a car in the near future and she is putting all of the birthday money toward the purchase. On June 1, she opened a savings account and deposited the $530. The account pays an annual interest rate of 0.5% compounded daily a) How much interest will Jodie earn in one month (30 days)? b) How much interest will Jodie earn in six months (183 days)?

Solution Method 1: Use the Compound Interest Formula

Solution Method 2: Use a TVM Solver

Solution Method 2: Use a TVM Solver

Determine Service Charges Example 2 Determine Service Charges Hun’s bank charges $5.95 for up to 10 transactions per month plus 75¢ for each additional transaction. In November, he made eight transactions; in December, he made 23 transactions. Determine the service charges deducted from Hun’s account balance each month.

Determine Service Charges Example 2 Determine Service Charges

Key Concepts Financial institutions pay interest when you deposit your money into one of their accounts. Often, financial institutions charge fees or service charges for providing you with certain services.

IN-CLASS & HOMEWORK Page 465-466, #1, 2, 6, 8