Review

•Microeconomics•Macroeconomics •OECD •Currency values • Transportation• Languages and culture

Factors of SavingBy Kru Danny

Vocabulary

• Saving• Interest • Savings account•Money market deposit account (MMDA)• Time deposits •Maturity

How much do you save?

Harvard University

Harvard university undertook a survey about teaching children about

saving.

They said, by the age of 3, children can grasp concepts

of money.

By the age of 7, children already have their habits which will stay with them through their older years.

•Saving – setting aside income for a period of time so that it can be

used later on.

• MM TEST

• Any saving that you do now may be only for purchases that require more funds than you have at one time.

• When an individual saves, the economy as a whole benefits.

• HOW?

• Saving provides funds for others to invest of spend.

• Saving also allows businesses to expand, which provides increased income for consumers and raises the standard of

living.

Where do I keep my money?

• You have many options regarding places to save your money:

• Commercial banks • Savings and loan associations• Savings banks • Credit unions

Trade-offs

• When searching for your best savings plan, you need to consider the rate of interest that you will

get back.

• Interest – the rate (percentage) of money you will receive back after investment.

How to save

• 1) Determine reasons to save.

• 2) Determine amount of funds to set aside.

• 3) Decide what type of account you will use.

• 4) Decide frequency of deposit

• 5) Decide when to invest a portion of what you have saved.

Where to save Type of account

Minimum deposit?

Rate of Interest

Availability of funds

Savings No Low Immediate

Money market

$1,000 High Immediate

Time deposit

$1,000 High Penalty for early withdraw

Savings account

• A basic savings account is an interest-earning account that has no set maturity.

• Funds from such accounts can be withdrawn at any time without penalty.

• Penalty – early withdraw of money will result in a fee.

Money Market Deposit

• A money market deposit account (MMDA) is another type of account that pays high rates of

interest.

• It also allows immediate access to your money.

• However, the trade-off is that you must invest in a minimum amount; $1000 - $2,500.

Time deposits

• Time deposit accounts requires savers to deposit their savings for a certain period of time.

• This period of time is called, maturity.

• It could be 1 month to 10 years maturity.

• Time deposits offer higher interest rates than MMDA or savings accounts because of the length of saving

maturity.