1. Financial Algebra
3 April 2018

2. announcements
This week is PERT testing (Wednesday/Thursday) and continuing makeups
Thankfully, no one in here is on the list
Please remember: the first quiz of the quarter is due by April 5th
Today is the last day to pick up a copy
Regrades have not been completed/input into the system yet

3. Some of the Vocabulary for this section
401(k)/403(a) plans
Annuity
Interest
Compound interest
Annuity/fixed annuity
Individual retirement account (IRA)
Traditional IRA
Roth IRA
SEP-IRA
Money market deposit account 
Pension plan
Vesting

4. Money Market Deposit Account (MMDA)
Money market deposit account (MMDA): A special type of hybridized savings account with certain restrictions and advantages
You are required to maintain a minimum balance and will be charged if you don’t
There is no maturity date
The account pays interest like a regular savings account
You are offered limited check-writing privileges (closer to a regular checking account)
If you write more checks per month than your limit, then you will be charged a fee
MMDAs are similar to negotiable order of withdrawal accounts (NOWs), but different in that:
The interest rate on a NOW tends to be much lower than an MMDA
NOWs are less likely to charge money for writing larger numbers of checks

5. APY and Comparing Savings Options
Compound interest: Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan
In simpler terms: “Interest made on interest”
We touched on it briefly in yesterday’s real-world problem
Annual percentage yield (APY): The interest rate that takes the compounding frequency into account
Huh?
APY tells you what your account will really earn on an annual basis once compounding is taken into consideration
Always use APY as a tool to evaluate savings options that have different compounding frequencies
Banks must make the APY available to you

6. Retirement savings I did mention before that all of you are lucky…
You have a commodity that I don’t have when it comes to retirement…and life in general really.
You have time.
If you start saving now, you can accumulate a lot more than if you waited for a few more years
How much more?

7. Retirement savings

8. Retirement savings