Unit 5: Saving and Investing

Section 1: Should I save or invest

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:

YES! Both Do it now

Should you save or invest?

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%

PAY YOURSELF FIRST

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!

APY: Annual Percentage Yield

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???

Liquidity

Inflation Increase in the general level of prices of

society You want to keep ahead of inflation with

your money.

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?

Investments

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)

CAN I?