1. © South-Western Educational Publishing Chapter 10 Saving for the Future Savings Goals and Institutions Savings Options, Features, and Plans

2. © South-Western Educational Publishing Why You Should Save Short-term needs – a year or less Long-term needs – over a year Home ownership Education Retirement Investing Financial security

3. © South-Western Educational Publishing How Your Money Grows Principal Interest Compound interest – the more interest is compounded, the more money you will make. Annual percentage yield (APR)

4. © South-Western Educational Publishing Compounding Interest Annually Beginning InterestEnding YearBalanceEarned (5%)Balance 1$100.00$5.00$105.00 2105.005.25110.25 3110.255.51115.76

5. © South-Western Educational Publishing Compounding Interest Quarterly Quarterly Compounding Annual Interest Rate = 6% BeginningQuarterlyQuarterly Interest Ending YearBalanceInterestQ1Q2Q3Q4Balance 1$100.00.015$1.50$1.52$1.55$1.57$106.14 2106.14.0151.591.621.641.66112.65 3112.65.0151.691.721.741.77119.57

6. © South-Western Educational Publishing Where You Can Save Commercial banks Savings banks Savings and loan associations Credit unions Brokerage firms

7. © South-Western Educational Publishing Savings Options Regular savings account Higher liquidity – easy to get your cash out whenever you need it. Lower interest rate Certificate of deposit (CD) Maturity date – the day to cash it in Penalty for early withdrawal Money market account – a type of savings account Minimum balance, limited withdrawals of $ Variable interest rate

8. © South-Western Educational Publishing Selecting a Savings Plan Liquidity – the ease of getting your cash out Safety Convenience Interest-earning potential (yield) Fees and restrictions

9. © South-Western Educational Publishing Saving Regularly Direct deposit Automatic payroll deductions – out of your paychecks – can go to stocks, 401K, savings, etc.

10. © South-Western Educational Publishing Compounding Interest and Making Additional Deposits Beginning InterestEnding YearBalanceDepositsEarned (5%)Balance 1$ 0.00$100.00$ 5.00$105.00 2105.00100.0010.25215.25 3215.25100.0015.76333.01 4331.01100.0021.55452.56