1. Monday, March 27, 2017
Objective: Students will be able to examine the types of accounts available to consumers from financial institutions and the risks, monetary costs, and benefits of maintaining these accounts. Purpose: Many of you have or will have financial accounts.

2. Roles of Interest and Risk
the higher the interest rate offered for savings, the more money will be available for savings
the lowering the interest rate lowers the amount of money available for saving
Risk: The chance that an investment's actual return will be different than expected
the riskier an investment is, the higher the interest is

5. Checking Accounts
Accounts that allow for numerous withdrawals and unlimited deposits
Risks: none (insured by FDIC)
Costs: fees (lower or none with minimum balance)
Benefits: don't have to carry cash, can be jointly held

6. Savings Account
Accounts that provide principal security and a modest interest rate
generally for money that you don't intend to use for daily expenses
Risks: none (insured by FDIC)
Costs: makes your money less accessible (no checks or debit cards)
Benefits: earn interest (often a small amount of money)

7. A $100 deposit, when compounded yearly at 5 percent, will more than double in value over 15 years. Would a higher interest rate encourage people to save more or less? Why?

8. Certificates of Deposits
issued by a bank to a person depositing money for a specified length of time
Risks: none (insured by FDIC)
Costs: money tied up for a period of time, penalty for early withdrawal
Benefits: constant interest rate (depends on the health of the economy), higher interest than savings accounts

9. Mutual Funds
made up of several types of investments collected from many investors for the purpose of investing in securities such as stocks and bonds
Risks: moderate (not insured by FDIC)
Costs: fees, can lose money, taxable
Benefits: safer than stocks, experts choose several companies to invest in

10. Money Market Funds
Special mutual funds that are composed of short-term securities
Risks: moderate (not insured by FDIC)
Costs: lower interest than CDs, allows you to write checks only if you maintain a high balance in the account
Benefits: no fixed interest rates (depends on the health of the economy), higher interest than Savings Accounts

11. Interest rates have fallen dramatically over the past two decades
Interest rates have fallen dramatically over the past two decades. What impact would low interest rates have on the way people invest their money?

12. Both savers start with $200 and put away $200 a month
Both savers start with $200 and put away $200 a month. Both earn 8 percent interest compounded annually. Saver 1 starts at age 18. Saver 2 starts at age 36. The difference in the amount they have at retirement is more than $1 million!

13. Individual Retirement Accounts
investing tool used by individuals to deposit funds that are used after retirement
Risks: none (insured by FDIC)
Costs: rules and penalties for early withdrawal
Benefits: tax deductions for having this account, guaranteed to have money after you retire

15. 401(k)
Allows you to set aside a portion of your pay before taxes are withheld for retirement purposes
Some employers match every dollar you save up to three percent of your salary
Money in a 401(k) will be taxed after you withdraw it years later
Typically, contributions are invested in a portfolio of mutual funds, but can include stocks, bonds and other investments

17. Certificates of Deposits
Type of Account
Definition
Risk
Costs
Benefits
Checking Account
Savings Account
Certificates of Deposits
Money Market Funds
IRA Accounts
Mutual Funds

18. Certificates of Deposits
Types of Financial Accounts
Type of Account
Definition
Risk
Costs
Benefits
Checking Account
Savings Account
Certificates of Deposits
Mutual Funds
Money Market Funds
IRA Accounts