© South-Western Educational Publishing Chapter 10 Saving for the Future Savings Goals and Institutions Savings Options, Features, and Plans.

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© South-Western Educational Publishing Chapter 10 Saving for the Future Savings Goals and Institutions Savings Options, Features, and Plans

© South-Western Educational Publishing Why You Should Save Short-term needs – a year or less Long-term needs – over a year Home ownership Education Retirement Investing Financial security

© South-Western Educational Publishing How Your Money Grows Principal Interest Compound interest – the more interest is compounded, the more money you will make. Annual percentage yield (APR)

© South-Western Educational Publishing Compounding Interest Annually Beginning InterestEnding YearBalanceEarned (5%)Balance 1$100.00$5.00$

© South-Western Educational Publishing Compounding Interest Quarterly Quarterly Compounding Annual Interest Rate = 6% BeginningQuarterlyQuarterly Interest Ending YearBalanceInterestQ1Q2Q3Q4Balance 1$ $1.50$1.52$1.55$1.57$

© South-Western Educational Publishing Where You Can Save Commercial banks Savings banks Savings and loan associations Credit unions Brokerage firms

© South-Western Educational Publishing Savings Options Regular savings account Higher liquidity – easy to get your cash out whenever you need it. Lower interest rate Certificate of deposit (CD) Maturity date – the day to cash it in Penalty for early withdrawal Money market account – a type of savings account Minimum balance, limited withdrawals of $ Variable interest rate

© South-Western Educational Publishing Selecting a Savings Plan Liquidity – the ease of getting your cash out Safety Convenience Interest-earning potential (yield) Fees and restrictions

© South-Western Educational Publishing Saving Regularly Direct deposit Automatic payroll deductions – out of your paychecks – can go to stocks, 401K, savings, etc.

© South-Western Educational Publishing Compounding Interest and Making Additional Deposits Beginning InterestEnding YearBalanceDepositsEarned (5%)Balance 1$ 0.00$100.00$ 5.00$