chapter 9 sources of capital l.
Skip this Video
Loading SlideShow in 5 Seconds..
Chapter 9: Sources of Capital PowerPoint Presentation
Download Presentation
Chapter 9: Sources of Capital

Loading in 2 Seconds...

play fullscreen
1 / 25

Chapter 9: Sources of Capital - PowerPoint PPT Presentation

  • Uploaded on

Chapter 9: Sources of Capital. Describe the benefits people gain by saving money. How do savings accounts differ from time deposits? How do economists measure savings?. Why do you save money?. Major purchases Annual or semiannual bills Unexpected expenses Major long-term expenses.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Chapter 9: Sources of Capital' - Faraday

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
chapter 9 sources of capital

Chapter 9: Sources of Capital

Describe the benefits people gain by saving money.

How do savings accounts differ from time deposits?

How do economists measure savings?

why do you save money
Why do you save money?
  • Major purchases
  • Annual or semiannual bills
  • Unexpected expenses
  • Major long-term expenses.
  • Amass wealth
what are the benefits of putting your money in a bank
What are the benefits of putting your money in a bank?
  • Security
  • Interest
    • Money cannot be lost.
types of savings accounts
Types of Savings Accounts
  • Regular Savings Account
    • OB: require only a small deposit.
    • OB: LIQUIDITY: can be converted to cash with little or no loss in interest payments.
    • OC: Most banks charge fees if balance too low.
types of savings accounts5
Types of Savings Accounts
  • Money Market Deposit Accounts:
    • OB: Generally higher interest rates offered. Depends on t-bill interest rates.
    • OB/OC: Fairly easy to withdraw.
    • OC: Interest rate might be lower than regular savings.
time deposits
Time Deposits
  • CDs (Certificates of Deposit) – required to leave money in account for a specific amount of time.
  • Maturity – When you can have your money back.
time deposits7
Time Deposits
  • USUALLY the longer in, the more interest earned.
    • Depends on interest rates!
  • Interest rate is established when the CD is purchased.
  • Require minimum deposit.
savings bonds
Savings Bonds
  • Purchasers assume little risk. The bonds are guaranteed by the US Government.
  • Buy the bond at a “bargain” and redeem it on the date for the full value on the bond.
    • Buy it for $25 and get $50 when you cash it.
savings bonds9
Savings Bonds
  • Kind of a loan to the government.
    • Pays for government programs.
    • Civic improvements.
    • Pays for the debt.
measuring savings
Measuring Savings
  • Economists measure savings to determine health of the economy.
  • The SAVINGS RATE is the percentage of people’s disposable income that is not spent.
    • Tells about wages
    • Tells about economic slowdowns
  • Interest rates are very low right now. What would be better, a savings account or a CD?
9 2 investing
9.2 Investing
  • Investment – people exchange their money for something of value with the expectation of earning a profit in the future.
  • Remember that there is RISK.
financial planning
Financial Planning
  • BUDGET: What are the fixed expenses and the flexible expenses.
  • How much are you willing and able to save?
financial planning15
Financial Planning
  • An investment plan should have diversification. A variety of investments.
types of investment
Retirement Plan (401k). - Employer offers a pension or a savings plan.

IRA: Self-employed, you establish a program to save.

Estate Plan: Life insurance, house – having a will to transfer funds and property.

Can be big bucks to the taxman!

Types of Investment
two types of investment
Two Types of Investment
  • Financial investment – exchanging property ownership and payment to make a profit.
  • Real investment – using money to create new capital goods.
easy way to remember
Easy Way to Remember!
  • Financial investment – collect items you expect to increase in value.
real investment
REAL Investment
  • Use money to create a new capital good.
    • Build an apartment complex. Money spent on the building is a REAL investment.
real investment and economic growth
Real Investment and Economic Growth
  • Capital accumulation promotes economic growth.
    • Katie builds her own business. She will hire construction workers, interior decorators, buy stock, hire employees, etc.
      • That helps the infrastructure!
real investment and technological change
Real Investment and Technological Change
  • Real investment enables companies to develop or purchase new technology.
    • Push-pull effect. New tech pushes new business, but new business pulls technology up to their needs.
real investment and entrepreneurship
Real Investment and Entrepreneurship
  • Venture Capitalists: REMEMBER Mark Marcula in PIRATES OF SILICON VALLEY?
    • Financed Apple.
    • Finds promising new businesses and invests.
      • Also government has options like Small Business Administration with low interest loans.
questions to ponder
Questions to Ponder
  • What are the goals of a personal financial plan?
  • How do financial investment and real investment differ?
  • How does real investment affect economic growth?
stocks bonds and futures
Stocks, Bonds and Futures
  • Why do people invest in the Stock Market?
    • Gain a profit
    • Limit risk on investments
    • Become part owner in a corporation.
stock terms
Stock Terms:
  • Blue Chip Stocks: SAFE stocks. Products people will always need. Companies that have history. Tend to always offer profits.
  • Stock Splits: AOL - $200 per share. 10 shares. $2000. 40 shares of AOL for $50. $2000.