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