1. Unit Four
Savings & Investments
Pages 43-57

2. Biggest difference between saving & investing is time
Money Work For You
Savings
Investments
Biggest difference between saving & investing is time

3. Very safe & earns small amount of money
Savings Account
Short-term goals
Very safe & earns small amount of money
Access money whenever want

4. Investing
Long-term goals
No guarantees

5. Time Value of Money
Relationship between time, money, and rate of return (interest), and their effect on earnings growth

6. Earned Interest
Payment you receive for allowing a financial institution or corporation to use your money

7. Three Most Important Factors
Time: more time more money
Money: more money = more money
Rate of interest: higher interest rate = more money

8. Value of money change over time
Inflation
Value of money change over time
Prices of goods and services increase over time

9. Earning interest on interest Greatest aspects of personal finance
Compounding
Money working for you
Earning interest on interest
Greatest aspects of personal finance
8th wonder of the world

10. How long takes money to double in value
RULE 72
How long takes money to double in value
Divide 72 by interest rate to get how long to double
Divide 72 by years to get what interest rate you need

11. DAY 2

12. Risk to Return Relationship
Greater risk = Greater return
Less risk = Less return

13. Rate of return is synonymous with rate of return
How fast your money grows

14. Diversification
The reduction of investment risk by spreading you money among several different investments

15. Price of goods and services go up Between 3% & 4% a year
Inflation
Price of goods and services go up
Between 3% & 4% a year
Stamp 1971 (8 cents)
Inflation can be higher than your interest rate in a savings

16. Make sure investment interest is higher than the rate of inflation
Investing
Make sure investment interest is higher than the rate of inflation

17. Income from savings does get taxed
Savings & Investments
Income from savings does get taxed
Taxes you on gains and profits

18. Why people put their money to work
Income or Growth
Why people put their money to work
Income – get paid in cash for holding different types of investments.
Growth – hold an investment hoping it will increase in value

19. Income Investments
More reliable returns
Returns are lower

20. Income Investments (Lenders)
Savings Account
US Savings Bond
Certificate of Deposit
Money Market Accounts
Corporate or government bond

21. Difference between purchase and selling price of stock
Capital Gain
Difference between purchase and selling price of stock

22. Growth Investments (Owners)
Stocks (represent ownership in a company)
Real Estate (land/building)
Collectibles (paintings)
Mutual Funds