Personal Finance: Three Basic Reasons to Save Money/The Power of Compound Interest

marathon/sprint

Building wealth is a _____________, not a ______________.

7%

Have at least a ___________ percent interest to make money on investments.

cash

Instead of borrowing to purchase, pay ___________ by using a sinking fund approach.

good/credit card

Interest in investment is ______, but for its is bad for ________

1. emergency fund 2. long term purchases 3. wealth building

What are the three basic reasons to save money?

discipline

______________ is the key ingredient when it comes to wealth building.

inflation

a general and progressive increase in prices; more dollars for the same number of goods

inflation

a persistent rise in the price of goods and services over a period of time

sinking fund

a way to save when you know you have a large purchase coming up

interest-bearing account

an account that generates interest income on the available balance in the account

compound interest

interest paid on interest previously earned

compound interest

is a mathematical explosion; interest earned on both the principal amount and any interest already earned

interest

-it is the money the principal (original amount invested) earns -typically a percentage of the principals, paid monthly, quarterly or annual basis

future value

= Pa (1+r/m) to the mt power

safest

A bank is one of the ____________ places to keep your money, since the financial crisis of 2005.

amount per month

Amount divided by time =

return on investment

ROI stands for

now

Start ________ on investing!

inflation

The convenience of a bank account comes at a cost. ____________ can eat up the interest you earn on an interest-bearing bank account.

$250,000 per depositor/account

The federal government (Federal Deposit Insurance Corporation or FDIC) increased the level of insurance on bank accounts to _____________.

long term investing

The interest rate matter when doing _______________

time value of money

This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future. This notion exists both because there is an opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the "value" of the money.