You will think about what kind of saving instru- __1__
$ H" Z0 Z4 a0 H ment to use or what kind of investment to make. By5 l4 E0 e6 S+ K) |$ w6 x2 G
putting your money in some kind of savings instrument2 H4 I$ B1 S6 {* G
or investment, you can set aside small amount of mon- __2__
- i$ S' g& `( T# A$ C, G# D k ey regularly and the money will earn interest or divi-& U* p( i& ^3 V6 @0 M& n
dends. Interest refers to the amount what your money __3__
: ^) P6 m. H( n% g. S( g" C earns when it is kept in a savings instrument. Divi-
5 z' W% u; D" w0 t, ^( b& \ n dends are payments of part of a company’s earnings to b2 F I4 N. h& c. V* ~: ^
people hold stock in the company. A savings instru- __4__* P# r* o! c3 ?% R b4 Z# i8 S
ment has an “interest rate ” associated with it; this re-" y! M5 Y1 I( M4 [3 ?: m7 r
fers to the rate which the money in the instrument in- __5__; ^! w2 {; ]9 N9 \7 {* v( _9 i e
creases during a certain period of time. Principal re-% m5 x' p1 z. }7 w
fers to the facial value or the amount of money you __6__6 f1 `1 ~' T8 y; v) T) o
place in the savings instrument on which the interest is
0 B. H5 \0 i& o4 i earned.
* f# P& A# v) n Every type of savings or investment has some risk
' [4 C n! R: x1 W& {5 K, K that the return will be less than needed or expected.6 d: s# z. C5 m. q$ n8 V
Federally insured savings accounts are safe and guar-6 e# J0 O) t' ]% r% _ r9 e, U# X" y
anteed up to $100,000 by the U.S. Government.6 H( N' r$ E1 T3 y/ s$ N
Therefore, they may have lower interest rates, making __7__ K" a+ A- \7 ^5 W& \
it hard to save large amounts of money for college. __8__0 h0 D3 k! Z9 v# ~# p; m
Bonds and stocks often have higher returns than sav-0 F& t' N' Z% m3 D
ings accounts or EE saving bonds but are more riskier. __9__8 P: ?, s& r5 A! ~8 Y7 W( e
You can reduce the risks of these kinds of investments
; a; c- z9 F! p/ u0 |3 ~. @* L. P by starting to save early. The earlier we begin the less __10__ x/ {& I/ d# o4 F! U* H `- R
money you will have to put aside each month and the
9 c+ i" d% m; q more total savings you will accumulate. |