Finance Basics: Goals, Savings & Interest

The primary benefits are higher interest rates and guaranteed returns for committing money for a specific time period.

Cashing in a CD early results in a significant loss of interest earned.

Larger deposits typically yield higher interest rates on CDs.

<p>The CPI measures the average change in prices for consumer goods, which helps investors understand inflation's effect on purchasing power.</p> Signup and view all the answers

<p>Preferred stock is less risky with fixed dividends, while common stock has higher risk and variable returns based on company performance.</p> Signup and view all the answers

<p>The value and frequency of dividends for common stock depend primarily on the company's earnings and overall economic conditions.</p> Signup and view all the answers

<p>Stocks are long-term investments that can lead to significant gains or losses based on market performance and economic trends.</p> Signup and view all the answers

<p>A bond is a certificate of debt issued by a corporation or government, representing a promise to pay back borrowed funds with interest.</p> Signup and view all the answers

<p>A regular savings account typically requires a lower minimum deposit and has no limit on withdrawals, while a money market deposit account usually requires a higher minimum deposit and limits the number of withdrawals.</p> Signup and view all the answers

<p>Compound interest is calculated on the initial principal plus any previously earned interest, whereas simple interest is calculated only on the principal amount.</p> Signup and view all the answers

<p>The factors include the rate of interest, the method of interest calculation (simple or compound), and the time the money remains in savings.</p> Signup and view all the answers

<p>Certificates of Deposit typically offer higher interest rates and fixed terms, providing better returns than regular savings accounts but often require the funds to remain untouched for the duration of the CD.</p> Signup and view all the answers

<p>Setting SMART goals helps ensure clarity and focus, making it easier to achieve financial objectives and monitor progress.</p> Signup and view all the answers

<p>Regular savings accounts pay the lowest interest rates among various savings and investment options, limiting potential earnings.</p> Signup and view all the answers

<p>Federally insured accounts, such as savings accounts and money market accounts, are protected by the government, ensuring that depositors do not lose their money even if the bank fails.</p> Signup and view all the answers

<p>The typical minimum deposit required for a money market deposit account is often $1,000 or more.</p> Signup and view all the answers

<p>Money market funds typically offer a higher rate of return than savings accounts and can be cashed in at any time.</p> Signup and view all the answers

<p>Certificates of deposit generally have a fixed term and lower liquidity compared to money market accounts, which can be accessed anytime.</p> Signup and view all the answers

<p>Interest rates directly impact the returns on money market funds, which can fluctuate based on prevailing market rates.</p> Signup and view all the answers

<p>Money market funds are generally considered to carry low risk, similar to savings accounts, but they may have slightly higher risk due to the types of securities they invest in.</p> Signup and view all the answers

<p>Most bonds have a minimum investment of $1,000, which may lead investors with limited funds to prefer alternatives like bond funds.</p> Signup and view all the answers

<p>Corporate bonds usually carry higher risk compared to US Government bonds, and they tend to offer higher returns to compensate for that risk.</p> Signup and view all the answers

<p>Specialized funds focus on either one specific industry or type of security, such as government bonds or common stocks.</p> Signup and view all the answers

<p>An investor might choose a balanced fund for lower risk and consistent dividend income compared to the higher risk associated with growth funds.</p> Signup and view all the answers