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Ch.5 Savings
| Term | Definition |
|---|---|
| Savings Plan | A strategy for using money to reach important goals and to advance your financial security. |
| Emergency Fund | An account of money you can easily access in case of a job layoff, illness, or unexpected expense |
| SMART goal | Something you want to achieve stated in terms that are specific, measurable, achievable, realistic, and time related |
| Savings account | An account designed for accumulating money for future use |
| Annual percentage yield (APY | The rat e of yearly earnings from an account, including compound interest |
| Interest-bearing savings account | A type of demand deposit account that pays interest and allows for regular deposits and withdrawals; no set maturity date( do not have to wait until the end of a certain period of time to have access to your money |
| High-yield savings account | An account that pays a higher interest rate than passbook and statement savings account |
| Certificate of Deposit (CD | A savings account that requires a deposit of a fixed amount of money for a fixed period of time or term |
| Simple Interest | Interest earned only on the principal, which is the amount of money originally deposited |
| Compound Interest | An amount calculated using the principal (money deposited) plus the interest it earns |
| Rule of 72 | An equation that estimates how long it will take to double an investment with a fixed interest rate |
| Tax exempt | Means free of certain taxes. Certain savings accounts for educating expenses are tax exempt |
| Tax deferred | Means that taxes on the principal and/or earnings are delayed until the funds are withdrawn. Retirement savings accounts are a common example; taxes are deferred until withdrawals begin at retirement |
| Online-only bank | (Interest-only bank) A financial institution that conducts customer transactions via the Internet |
| Share account | Savings accounts at credit unions |
| Brokerage Firm | A place where you can purchase a variety of investment products as well as open savings accounts; usually pay higher interest rates than traditional banks and credit unions |
| Money Market Account | A type of savings account that typically pays higher interest rate than regualr savings accounts |
Created by:
Jakea Harris
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