Lesson 4 Savings Options

Lesson 4 Savings Options

Module 4

Objectivies

• Identify various methods of saving money.

• Discuss the benefits and drawbacks to different forms of saving money.

Essential

Discuss the purpose of financial institutions.

Open Ended

Is playing the lottery a good way to invest for retirement?

Is playing the lottery a good way to invest for retirement?

NO! In fact the odds of striking it rich on a popular game such as the Powerball are 1 in 175,223,510. If you were planning on your retirement income coming from your Powerball winnings you'll have better odds "winning" these.

Lesson 4 Savings Options

Warm-Up

Multiple Choice

A type of bank account where the bank invests the money in government and corporate securities in order to pay a higher interest rate than a regular savings account. You typically have to have a large minimum balance in order to have such an account.

• Savings Account

• Money market account

• Checking Account

• CD

Multiple Choice

Retirement account that allows investors to make tax-deductible contributions. Individuals are responsible for setting up and managing the account.

• 401K
• IRA
• 403B
• Social Security

Multiple Choice

Act of purchasing assets (stocks, bonds, property) with expectation that they will increase in value over time.

• Withdrawing
• Depositing
• Time Value of Money
• Investing

Multiple Choice

Money paid to you by a financial institution when you deposit funds there.

• Allowance
• Income
• Interest
• Tips

Multiple Choice

The percentage rate that is used when calculating the interest (money) paid on a savings, money market, or investment account.

• Rule of 72
• Interest rate
• Simple Interest
• Rate of Return

Multiple Choice

Interest paid periodically and paid on the principal plus interest earned.

• Simple Interest

• Compound Interest

• Hard Interest

• Double Interest

Multiple Choice

Defined contribution retirement account that is taken out of your paycheck before you pay any taxes on this income.

• IRA

• Roth IRA

• 401K

• Pension

Multiple Choice

Defined contribution retirement account that is taken out of your paycheck before you pay any taxes on this income.

• IRA
• Roth IRA
• 401K
• Pension

Lesson 4 Saving

Vocabulary

Certificate of Deposit

An investment that usually pays higher interest than a saving account; however, in exchange for the higher interest you lose some liquidity.

Liquidity

The ease of transferring your asset to cash.

Annual Percentage Rate

The actual Rate used to calculate interest in one year.

Compound interest

when interest is earned on interest.

Money Market

A savings account that usually pays higher interest compared to a saving account; however the minimum deposit required is usually higher.

Individual Retirement Account (IRA)

A savings plan that offers a way to save for retirement and enjoy tax benefits.

Principle

The amount of money deposited

Annual Percentage Yield (APY)

The actual Rate of Return on your investment that takes into account compounding.

Savings account

An account from which you can easily withdraw money without pay8ing a penalty; however usually pays very low interest.

Lesson 4 Saving Options

Video Lesson

Lesson 4 Savings Options

Quiz 4

Multiple Choice

If an asset has high liquidity, that asset can very quickly and easily be converted to cash.

• True

• False

Multiple Choice

APY is the actual Rate of Return on your investment. It takes into account compounding.

• True

• False

Multiple Choice

Which of the following usually provide the investor with the most interest?

• Certificate of Deposit

• Checking Account

• Savings Account

• Money Market Savings Account

Multiple Choice

Investing for your retirement by playing the Powerball is a good investment.

• True

• False

Multiple Choice

$100 compounded annually for two years at 3% interest would provide the investor with how much of a return?

• $3.03

• $6.00

• $6.09

• $3.00

• None of these above

Multiple Choice

Which of the following has the lowest liquidity?

• Savings Account

• Cash

• Checking Account

• House

Lesson 4 Saving Options

The End !