1. C12S1: Savings and the Financial System
Main Idea:
The components of a financial system work together to transfer savings to investors.

2. C12S1: Savings and the Financial System
Key Terms:
Financial system
Certificate of Deposit
Financial asset
Financial intermediary
Nonbank financial institution
Finance company
Premium
Real Estate Investment Trust

3. C12S1: Savings and the Financial System
Saving vs. Savings
Saving is the absence of spending
Savings is dollars available because people are not spending

4. C12S1: Savings and the Financial System
Saving and Capital Formation
Saving allows money to become available to others
Money in the bank is lent out to people that want to start businesses

5. C12S1: Savings and the Financial System
Financial Assets and the Financial System
Financial Assets
Can save money by putting it in the bank or buying a CD
You receive receipts for saving, called financial assets
Financial Intermediaries
The intermediary bridges the gap between the savers and the borrowers

6. C12S1: Savings and the Financial System
Financial Assets and the Financial System

7. C12S1: Savings and the Financial System
Nonbank Financial Intermediaries
Finance Companies
Sell loans directly to consumers
Some offer bill consolidation loans to help you pay off other bills
Life Insurance Companies
Pay premiums, like other insurance
Get a payout in the event of your death

8. C12S1: Savings and the Financial System
Nonbank Financial Intermediaries
Mutual Funds
The company sells stock in itself
Takes that money and invests it in a number of other corporations
Pension Funds
Regular payment into a fund to assist with retirement or injury