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Saving and Investing Tools. Carl Johnson Financial Literacy Jenks High School. Terms to Know. Certificate of Deposit Corporate Bonds Money Market Mutual Funds Mutual Fund Rate of Return Risk Savings Account Savings Bonds Stocks . Savings Strategies.

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Saving and investing tools

Saving and Investing Tools

Carl Johnson

Financial Literacy

Jenks High School

Terms to know
Terms to Know

Certificate of Deposit

Corporate Bonds

Money Market Mutual Funds

Mutual Fund

Rate of Return


Savings Account

Savings Bonds


Savings strategies
Savings Strategies

Your goals will determine the choices that you will want to make when planning your savings and investments

Savings is generally used to meet short and medium term goals of seven years or less, while investing is generally used to meet long term goals

There are several options to consider when planning your savings strategy: savings accounts, certificates of deposit (CD’s), government savings bonds, money market mutual funds and checking accounts

Savings strategies1
Savings Strategies

Savings Accounts

Interest bearing accounts at banks and credit unions

Usually have low interest rates, are used to deposit small amounts of money and meet short term goals

Great way to establish an emergency fund

Make sure bank has FDIC protection/credit union has NCUA insurance

Savings strategies2
Savings Strategies

Certificate of Deposit

Also called CD’s

Offered by most banks and credit unions

  • Covered by federal insurance

    When purchased, you have to wait a certain amount of time until CD matures to get your money

  • Ranges in time from 30 days to many years, depending upon what CD you use

    The longer the term of the CD, the higher the rate of interest

    Less liquid as a savings account, but usually have a higher interest rate than a savings account

Savings strategies3
Savings Strategies

Government Savings Bonds

Backed by the U.S. government, so there is little or no risk

Default risk is the potential that the bond issuer will not pay the interest or return your money when it matures

Many are designed to be held for a minimum number of years before you can cash them in to get your money and interest

Have a higher rate of return due to the length of maturity, but also are low risk which reduces potential earnings

Savings strategies4
Savings Strategies

Money Market Mutual Funds

Designed to provide higher rates of return than savings accounts because money is actually invested in very short term investments with low risk

Available at banks and credit unions, but may be also offered by other financial service providers

  • The ones offered by banks and credit unions are covered by federal insurance, while those offered by other financial service providers are not

    • To cover the additional risk, those tend to pay higher interest rates

Savings strategies5
Savings Strategies

Checking Accounts

Basic purpose is not saving money, but to provide a convenient way to handle personal and business transactions

Many checking accounts earn a very small percentage of interest

Investing strategies
Investing Strategies

When you invest, you are really hoping for a higher rate of return than when you save

Investment options tend to have higher rates of risk than savings options, but also tend to have higher rates of return

As in any investment, there is no guarantee to making money

Most adults tend to focus their investments on retirement benefits

  • It is never too early to consider your strategy for long term goals

Investing strategies1
Investing Strategies

Mutual Funds

Provides an opportunity for investors to pool money together to buy shares of a fund that invests in many different products (stocks, bonds and securities)

Is a great way for people with limited money and knowledge about investing to get started

Mutual funds accounts have a professional money manager who monitors the account closely to make sure that it is earning the maximum amount possible

Investing strategies2
Investing Strategies

Mutual Funds

Various economic factors may cause the rate of return to fluctuate, even lose money

Because it is a long term investment, you generally have an opportunity to recover from any loss

Most financial experts recommend mutual funds because the potential gains are greater than the losses

Investing strategies3
Investing Strategies


Buying stocks allow to own part of a company

Don’t just buy stocks in one company, you can diversify your portfolio by buying stocks in more than one company

  • Experts recommend owing at least ten different stocks in different industries

    Buying and selling stocks can be exciting and profitable, but it is more risky and expensive than owning a mutual fund

Investing strategies4
Investing Strategies

Corporate Bonds

When you buy a corporate bond, you are making a loan to the company

You allow them to use your money, and they pay you interest

The interest that you receive is the value of your investment

Buying into bond mutual funds is an alternative for investors because it spreads your risk

It is a lower risk option with lower returns than stocks

Rates of returns
Rates of Returns

Risk levels are different for various savings and investment options

The rate of return is the amount of money that you can earn when saving and investing

The higher the average return, the more risk you are taking as an investor

Average returns do not guarantee what you will earn, they will only show what has happened in the past with that type of investment