Unit 6 Economy

• What is the Time Value of Money?

• The Time Value of Money states that money loses value over time due to inflation.
• The Time Value of Money is the concept that money available today is worth more than the same amount in the future due to its potential earning capacity.
• The Time Value of Money is the idea that future money is always worth more than present money.

• What are the Present Value and Future Value Formulas?

• • PV = the present-day value of money to be received in the future

  • FV  = the value of money in the future that is invested today.

• Present Value: PV = FV * (1 - r)^n; Future Value: FV = PV / (1 - r)^n
• Present Value: PV = FV * (1 + r)^n; Future Value: FV = PV / (1 + r)^n

What are some Types of Savings Tools?

• Checking accounts
• Investment portfolios
• Savings accounts, certificates of deposit (CDs), money market accounts, high-yield savings accounts.

What are the pros and cons of Savings Tools?

• Pros: Earn interest, safe storage of funds.

  Cons: Lower returns, potential fees.

• Guaranteed high returns, no fees
• High liquidity, easy access to funds

• What is the purpose of Savings?

• To accumulate debt for future expenses.

• The purpose of savings is to provide financial security and enable future investments or purchases.

• To spend money immediately on luxury items.

What are some Types of Investment Tools?

• Stocks, bonds, mutual funds, ETFs, real estate, commodities
• savings accounts
• credit cards

What are the pros and cons of Investing Tools?

• Guaranteed profits
• • Pros: Higher Rate of Return; To Build Wealth

  • Cons: More Risk; Less Liquid

• No need for research

• What is the Trade Off?

• A trade-off is a strategy to eliminate competition.
•  Higher Returns = Higher Risk

• A trade-off is a method to maximize profits.

• What is the purpose of Investment Tools?

• To provide entertainment and leisure activities.
• To track personal health and fitness goals.
• Long Term Goals (College, Buying a House, Retirement)

• What is Return?

• Return is the amount of money invested.
• Return refers to the initial capital of an investment.
• Return is the profit or loss from an investment.