1. Saving and Investing

2. Saving is important to meeting financial goals
Best way is to save a fixed amount from every check- have it automatically deposited in savings
Be sure to have concrete (SMART) goals for the saving to avoid impulse spending
Saving in accounts protects your money and allows you to earn interest on the savings

3. Types of Savings Savings account: Earn low interest on principal
Financial institutions loan the money to others
Checking account:
Money for purchases
Must keep careful records
Debit cards allow paperless money transfer

4. Types of Savings (continued)
Money Market:
Requires higher minimum balance
Many allow check writing (limited)
Higher interest rates than savings accounts
Certificates of Deposit (CD):
Must be left in for a set amount of time
Higher rates of return

5. Investing
Investing in stocks and bonds leads to higher returns than other savings
Stocks:
Shares provide partial ownership in a company
Price of share goes up/down based on company performance

6. Investing (continued)
Bonds:
Loans money to company or government
Pays set rate of interest over several years
US government bonds are a very safe investment
Mutual Funds:
Pools money to invest in different stocks and bonds
Chosen by financial experts
Less risk than investment in individual stocks

7. Financial Planning Pyramid
Penny
Stock
Commo- dities
Collectibles
Speculative
Stock / Bonds /
Mutual Funds
Real
Estate
Blue-Chip
Common
Growth
Mutual
Funds
High-Grade
Convertible
Bonds
Preferred
Balanced
Corporate Bonds
or Mutual Funds
Municipal Bonds
Money Market
Accounts
Certificates
of Deposit
U.S. Savings
Insured Savings /
Checking Accounts
Treasury
Issues
Financial Planning Pyramid
Highest Risk
Highest Earnings
Lower Risk
Lower Earnings