2. Disclaimer: The views expressed are those of the presenter and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.

3. You have budgeted and identified an amount to save monthly
You have budgeted and identified an amount to save monthly. Where are you going to put your savings?

4. Investments
An investment is anything you acquire for future income or benefit, which increases your wealth
Good investments will make money; bad investments will cost money.
Important: Always do your homework. Gather as much information as you can.

6. Types of Savings Accounts
Money Market Account
Earn interest
No fee if minimum balance is maintained
May offer check writing services
Insured by FDIC/NCUA up to $250,000
Savings Account
Easy access to money
Earn interest
Move money easily from one account to another
Insured by FDIC/NCUA up to $250,000

7. Types of Savings Accounts
Certificate of Deposit (CD)
Earn interest during term (3 mo, 6 mo, etc.)
Must leave deposit in account the entire term to avoid penalty fees
Receive principal & interest at the end of term
Insured by FDIC/NCUA up to $250,000

8. Investments
An investment is anything you acquire for future income or benefit.
Investments increase by generating income (interest) or by growing (appreciating) in value.

9. Types of Investments
Bonds – Lending money to a federal or state agency, municipality or other issuer. It is an IOU and issuer promises to pay a stated rate of interest and face value
Stocks – Becoming part owner of the company
Mutual Fund – Investing in many companies (diversify risk)

10. Retirement Investments
Individual Retirement Account (IRA)
Build wealth and retirement security
Money grows tax-free
Penalty fees if money is withdrawn before the age of 59 ½
401K Plans
Certain percentage of before-tax salary is put into plan for retirement
Employer matching
Professionally managed
Investment choices vary in risk

11. Retirement Investments
A 20-year-old who begins investing $3,000 each year toward retirement will have a nest egg over $1.2 million at age 65 if that investment earns an average annual rate of return of 8 percent. If you wait until you are 40 to start investing, the results are much lower (about $275,000).

12. Other Investments Building Equity Quicker: Investing in your House
Investing in a house
Want to build equity (difference between market value of the house and the balance on mortgage)
Mortgage Term
30 years
15 years
Loan amount
$118,000
Months to pay
360
180
Annual percentage rate
4.0%
3.0%
Monthly payment
$563
$815
Total interest
$84,806
$28,680
Interest savings
$56,126

13. How much risk should you take?
Financial Goals – How much money do you want to accumulate over time?
Time Horizon – How long can you leave your money invested?
Financial Risk Tolerance – Are you in a financial position to be riskier?
Inflation Risk – Investment sensitivity to inflation rate.

14. Start Your Own Business
Entrepreneur (än trə prə nər ׳) n.
An innovator and risk taker who tries a new way of doing things; one who develops products and processes and organizes economic resources to please customers.