building wealth unit

checking account

account that provides an easy method for withdrawing and depositing money

savings account

account designed to hold money not spent on current consumption

Money Market Deposit Account

account that usually has min balance requirements and tiered interest rates

Certificate of Deposit

account that is used for a fixed period of time and allows restricted access to the funds

List the savings tools from highest interest to lowest interest

certificate of deposit, money market, savings account, checking account

List the savings tools from most liquid to least liquid.

checking account, savings account, money market, certificate of deposit

checking account

Reduces the need to carry large amounts of cash.

savings account

Easily accessible, but less liquid than checking accounts.

savings account

May require a minimum balance or have a limited number of withdrawals each month.

certificate of deposit

Penalties are most likely assessed if funds are withdrawn early.

money market

nterest rates are tiered.

certificate of deposit

Time length usually ranges from seven days to ten years.

money market

Less liquid than savings accounts but earns higher interest rates.

monetary

What type of asset is saving?

6 months

How much should be saved?

interest

the price of borrowed money

return

profit or income generated by saving and investing

investment risk

possibility that an investment will fail to pay the expected retun

investments

assests purchased with the goal of providing additional income from the asset itself but with the risk of lost

rate of return

total return/amount of money invested= rate of return

bond

fixed income investment. Form of lending to a company or the government; least amount

stock

a share of ownership in a company; high if not diversified

real estate

ownership of residential or commercial property or land; typically low

speculative investment

have the potential for significant fluctuaions in return over a short period of time; high risk

mutual fund and index fund

when a company combines the funds of many different investors and then invests that money in a diversified portfolio of stocks and bonds; low risk

portfolio diversification

reduces risk by spending money amongst a wide array of investments

brockerage firm

facilities the buying and selling of investments on the stock exchange