Saving and Investing

1. Saving and Investing BBI2O

2. Saving and Investing • Consumers can use any money left over from purchasing goods and services toward savings or investing • Saving means putting money aside for future use • Investing is using savings to earn extra income • For most consumers, it is a good idea to combine both savings and investing in their financial plan.

3. Savings Plans • A savings plan ensures that a certain amount of money is put aside on a regular basis to reach a financial goal

4. Why People Save • People save for many reasons including emergency needs, short and long-term goals, and security and future needs • Benefits of Savings Plans: Plans offered by financial institutions can offer • interest • safety • insure against loss

5. Earnings • When money is deposited into an account at a financial institution, it is being lent to the institution so that it can also be lent to other borrowers • Interest is paid to the account holder for the use of the money • Interest is also paid by the person borrowing the money • Rate of return is interest expressed as a percent of the original investment. It is also called yield. ($1000 x .05 = $50)

6. Safety • Established in 1967, the Canadian Deposit Insurance Corporation (CDIC), an agency of the federal government, protects depositor’s funds to a maximum of $100,000

7. Liquidity • Liquidity is the ability to convert an asset or investment into cash quickly and easily • There is a wide range of savings plans available to individuals from different institutions

8. Savings Accounts • Savings accounts are the safest way to save and earn some interest or return on your money • Interest rates and calculation methods vary from one institution to the next, and fluctuate with economic conditions