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Unit 5: Saving and Investing

Unit 5: Saving and Investing. Section 1: Should I save or invest. I CAN:. Differentiate between the various types of saving and investing accounts based on safety, interest rates, and annual percentage yield Explain the importance of liquid assets

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Unit 5: Saving and Investing

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  1. Unit 5: Saving and Investing Section 1: Should I save or invest

  2. I CAN: • Differentiate between the various types of saving and investing accounts based on safety, interest rates, and annual percentage yield • Explain the importance of liquid assets • Describe how investment can protect us against inflation

  3. Should you save or invest? • YES! • Both • Do it now 

  4. PAY YOURSELF FIRST • THE MOST IMPORTANT THING IN PERSONAL FINANCE • 10% of every paycheck should go into a savings account for yourself. You should have enough money to cover 6 months of your payments as emergency money • Once this is covered, INVEST your 10%

  5. APY: Annual Percentage Yield • This is how much money you make in interest each year from your savings or investment accounts. • If you have $100 in a savings account earning 1% interest, you will earn $1 at the end of the year. Your APY is 1% in this scenario. • This is your number 1 consideration, when deciding to save or invest!

  6. Liquidity • How fast can you get your money? • If its in checking is VERY LIQUID! I can get my money anytime day or night. • If I invest in buying a house, my money is NOT very liquid. I have to wait until the house is sold to get that money… This could take YEARS • ALWAYS have LIQUID money available for emergencies… your car could break down, or you might need bail money. You do NOT want to charge this to a credit card! • AT LEAST ___ months of your debts???

  7. Inflation • Increase in the general level of prices of society • You want to keep ahead of inflation with your money.

  8. Investments • You can invest in anything that has a worth (like a house or business) • Financial investments mean you put MONEY into your investment. • You could also invest time, energy, your skill or knowledge… • What are the financial investments when you “flip a house” • What are other investments you might make?

  9. CAN I? • Differentiate between the various types of saving and investing accounts based on safety, interest rates, and annual percentage yield • Explain the importance of liquid assets • Describe how investment can protect us against inflation • I can prove this by completing: • 5.1 (info sheet and worksheet) • 5.2 (info sheet and worksheet)

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