Unit 4 - Saving & Investing

Front

Which of these statements about saving is INCORRECT? People often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first place, It is extremely difficult to open a traditional savings account, as you typically need at least $10,000 for your initial deposit, Without a separate savings account to pay yourself first, it's more likely that you'll spend all of your income each month, Billions of dollars are spent on marketing to persuade consumers to spend money instead of saving it

Back

It is extremely difficult to open a traditional savings account, as you typically need at least $10,000 for your initial deposit

Front

Sam saved $2,000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a few years AND wants to earn the highest interest rate? Regular savings account, Money Market account, Checking account, Certificate of Deposit

Back

Certificate of Deposit

Front

When a bank says their savings account earns 1% interest, that typically means you will earn 1% interest over what period of time?

Back

Annually

Front

If Benjamin deposits $1,000 into a savings account that pays 1% interest, the 1% interest for year two would be based off ____________ for simple interest and ________________ for compounding interest.

Back

The original deposit ($1,000); The year one account balance ($1,010)

Front

Which of the following is an effective strategy for personal saving?
- Wait until the end of the month and save whatever is left in your checking account
- Save a certain percentage of each paycheck and deposit it directly into a savings account
- Cover all of your wants and needs and save whatever is left over
- Take out a payday loan so you can save before you receive your paycheck

Back

Save a certain percentage of each paycheck and deposit it directly into a savings account

Front

Which of the following statements about banks is FALSE?
If it is FDIC-insured, your money is safe even if the bank fails
Many banks pay interest on the money you deposit with them
Historically, savings accounts earn higher returns than investments in the stock market

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Historically, savings accounts earn higher returns than investments in the stock market

Front

You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for…

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A new cell phone, college tuition, a house down payment

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If you follow the 50-20-30 rule of budgeting, you'll be putting 50% of your monthly income toward _______________, 20% of your monthly income toward _____________, and 30% of your monthly income toward ______________.

Back

Needs, savings, wants

Front

Which statement best describes the difference between saving and investing? Options: Saving is done with small amounts of money, and investing is done with large amounts of money; Saving protects your money from inflation while investing does not protect your money from inflation; Saving is for low-income people, while investing is for rich people; Saving goes into an FDIC insured bank while investing typically goes into stock or bond markets

Back

Saving goes into an FDIC insured bank while investing typically goes into stock or bond markets

Front

Which represents the best time to start saving for your retirement?

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As soon as you graduate and have your first full-time job