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Saving and Investing

Saving and Investing. Mr. Mizak Economics Fall 2009. Saving. Define: setting aside of income for a period of time so it can be used later Is saving a good thing for an individual? Is saving good for the entire economy? Answer to both = YES

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Saving and Investing

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  1. Saving and Investing Mr. Mizak Economics Fall 2009

  2. Saving • Define: setting aside of income for a period of time so it can be used later • Is saving a good thing for an individual? • Is saving good for the entire economy? • Answer to both = YES • When people save, money can be provided for others to invest or businesses to grow

  3. Where can you save? • 1) Under your mattress • Pros/Cons 2) Savings bank - Pros/Cons Statement savings account- At the end of each month, individual gets a statement showing all transactions. This is what most people use

  4. Money Market Account- MMDA pays higher rates of indterest • Trade-off = requite 1,000 to 2,500 minimum balance and limited number of checks that can be used per month • Time Deposits • Certificates of deposit (CD) offer higher interest rates but money must be left untouched for a set period of time (3 months-8 years)

  5. Is your money safe?

  6. What happened in 1929? • After the stock market collapse many peopls’s savings were wiped out. • Out of fear, people rushed to the banks to withdrawal all their money • Often this would cause banks to fail

  7. FDIC • In response, Congress passed the Federal Deposit Insurance Corporation (FDIC) • Depositor’s money is protected up to $100,000. • If an insured institution fails, each depositor will be paid the full amount of their savings up to $100,000.

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