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Savings Options

Savings Options. Assignment. Go to the 3 ring binder and find the savings options organizer. Fill this organizer in as you view this PowerPoint. Savings Account. Examples: Passbook Savings Interest: Lower interest rate than other saving options

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Savings Options

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  1. Savings Options

  2. Assignment • Go to the 3 ring binder and find the savings options organizer. • Fill this organizer in as you view this PowerPoint.

  3. Savings Account • Examples: Passbook Savings • Interest: • Lower interest rate than other saving options • Interest rates sometimes higher when your balance is higher • Withdrawal Rules • Regulation D: Make 6 withdrawals within a statement cycle • Advantages • Safe, small opening deposit, earn interest

  4. Certificate of Deposit (CD) • CD: deposit that earns a fixed interest rate for a fixed period of time. • Interest: • Higher interest rates because the bank knows how long you will keep the $ on deposit…so they can offer you higher rates than a savings account. • Generally the longer the period of time you invest your money the higher your interest rate (or rate of return) will be. • Withdrawal Rules: • Pay % of interest designated by the bank for early withdrawal.

  5. Certificate of Deposit • Advantages • Higher interest rates than a passbook savings • Disadvantages • Your $ is locked up for a specific time period • If interest rates on another option is higher then you can’t take advantage of those higher rates without paying a penalty.

  6. Money Market • Combination of a savings and a checking account • Interest: • Higher interest than regular savings but lower than CDs • Different rates for different balances • Withdrawal Rules: • Regulation D…but 3 of your withdrawals can be checks • Advantages: • Higher interest rate than a passbook savings • Unlimited transfers electronically • Disadvantages: • Amount of times you can withdraw your $

  7. Government Bond • US Government owes you the amount of the bond plus interest • Interest: • Call treasury department for redemption table or go to your local bank. • Withdrawal Rules: • Can sell your bond at any time without penalty; you just wouldn’t earn the full amount of interest until the bond matures • Advantages • Safe way to invest your $

  8. Annual Percentage Yield (APY) • Interest the account will earn in 1 year • Helps compare rates at different banks

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