Chapter 21.1

Ways to Save  Open a savings account  Bank  Credit union  Savings accounts earn interest  Interest is the money that banks pay depositors for use of their money  Usually a percentage of the money you have

Types of Investments  Savings Bonds  When you buy, you are lending money to the government  Each year the bond grows in what it is worth  Money Market  High minimum balance  You are paid a dividend, or share of the profits  Certificate of deposit (CD)  Deposit an amount of money for a fixed period of time-the longer you do, the higher the interest rate

Retirement Plans  Pension plan  Funded in part by employer or union  Builds up throughout a worker’s career  Amount in pension is based on length of service and the employee’s salary  401K Plan  You put specific portion of your salary into the plan  Employers match this contribution

Retirement  IRA  Retirement account where you can put a limited amount of money in yearly  Money is not taxed until you retire  Must wait until age 59 ½ before you take money out or receive a penalty

For the self employed…  Keogh Plan  You can invest up to 25% of your yearly earnings for retirement  Simplified Employee Pensiong  Tax deferred retirement plan  Can put up to 15% of salary up to $30,000  Easier to set up/use than Keogh Account