Savings Options, Features,

1
Savings Options, Features, Plans

• Chapter 10 Part 2
• By Scott Feil
• 12/15/2005

2
Overview

• Savings Options
• Selecting a Savings Plan
• Saving Regularly

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Savings Options

• Regular Savings Account
• High Liquidity
• You can turn it into cash easily and quickly with
  no (or little) loss of value
• You can withdraw and deposit at any time
• Lower Interest
• Usually the lowest of all savings options
• (Except stuffing it in a mattress)

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Savings Options, cont.

• Certificate of Deposit (CD)
• Deposit money for a fixed length of time
• Must be at least a certain amount
• If you take it out early you will pay a penalty
• At a fixed interest rate
• Usually higher interest since it is less liquid
• Maturity Date
• The date on which the investment becomes due for
  payment

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Savings Options, cont.

• Money Market Account
• Combination savings/investment plan
• Highly liquid, money can be withdrawn any time
• Usually not insured
• Interest rate changes depending on the market
• Usually higher rate than savings account
• Usually requires a higher minimum balance

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Selecting a Savings Plan

• Liquidity
• How quickly can you turn it into cash?
• Safety
• Is it insured, for how much?
• Convenience
• Do you want to go to multiple banks for different
  services/accounts?
• Interest-Earning Potential (Yield)
• How much will you earn from this account?
• Fees and Restrictions
• Minimum balance? Service/ATM charges? Other fees?

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Saving Regularly

• Will you save every day/week/month?
• If you dont actually put the money in
• Direct Deposit
• You can have all or part of your check put
  directly into your savings
• Automatic Payroll Deductions
• Witholding a certain amount of each check
  automatically
• Payroll Savings Plan/Payroll Investment Plan