You will think about what kind of saving instru- __1__' a& v& a4 ^: [* I% M6 ]7 b
ment to use or what kind of investment to make. By
9 Q- @- }$ t# `9 T* R putting your money in some kind of savings instrument
) w2 J I' H1 o$ h- F% R1 t9 P( v4 v or investment, you can set aside small amount of mon- __2__
B% H% H) b0 d ey regularly and the money will earn interest or divi-1 C( @: w9 E4 b: C+ T# U/ P$ F3 z
dends. Interest refers to the amount what your money __3__
$ r5 `% V; m4 M# p6 x. z- H earns when it is kept in a savings instrument. Divi-
" W J3 `8 n; }" k. u7 y3 w# u4 _& Q" W dends are payments of part of a company’s earnings to
# W' B4 O% K7 e# ?$ W m people hold stock in the company. A savings instru- __4__
* y8 f% M. P x( T1 d$ m ment has an “interest rate ” associated with it; this re-
5 Z1 t( U: T' I5 z, @ fers to the rate which the money in the instrument in- __5__, X: u& c$ W1 @. G
creases during a certain period of time. Principal re-
- P! `* z6 T& ` fers to the facial value or the amount of money you __6__
3 G5 D2 c7 V$ |3 q- m place in the savings instrument on which the interest is
7 W! X+ J8 }; W& D. _* c3 Y) l earned.
/ Y$ w2 u& B$ X+ D Every type of savings or investment has some risk. R8 z8 Q' Z* Q3 f" s
that the return will be less than needed or expected.
+ }3 q3 h+ L1 Y. J/ M2 O2 t, t8 t Federally insured savings accounts are safe and guar-( I2 d0 Y7 Q& @; {* r
anteed up to $100,000 by the U.S. Government.9 t* o( b$ d7 b& W+ J# t
Therefore, they may have lower interest rates, making __7__
% }0 o0 P1 j8 ~ S7 M it hard to save large amounts of money for college. __8__/ @2 H6 p: q* L7 W+ C
Bonds and stocks often have higher returns than sav-/ A- n/ {# m3 K
ings accounts or EE saving bonds but are more riskier. __9__7 R) d7 s$ l8 [/ q- `
You can reduce the risks of these kinds of investments
9 K! o8 W! g) e( s0 W) | by starting to save early. The earlier we begin the less __10__
( u% D3 R6 J9 A, S) m, H7 a money you will have to put aside each month and the2 y1 `- k7 S6 N
more total savings you will accumulate. |