Assignment 4: Saving and Investing
Assignment 4: Saving and Investing
(32.0 points) 1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points) I babysit two kid for parents that work during the day so if one of the lost their job I would lose mine, If I saved up a financial reserve then I might have to use it to pay for my phone bill or for clothing I need. 2. How many months ' worth of expenses do you think your financial reserve should include? Describe at least two reasons for this decision. (3-6 sentences. 2.0 points) I think I would only need about a month or two because I think I could get another job pretty fast and also I do not have many expenses. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences. 2.0 points) I would rather have a saving account that offered compound interest because I would be making more in the long for due to the fact that this type of interest account adds interest to the interest from the past year. A simple account adds the same amount every year, when a compound adds more every year. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points) Daily compounding because this would add more interest to add interest on. 5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points) A saving account that would help me add on to my money so I wouldn’t have to pay in every paycheck but I can. 6. Describe two financial goals that you would want to meet before you begin investing. Explain why you would want to reach those goals first. (2-4 sentences. 2.0 points) You would want to save up a good amount of money so you could invest in larger products or companies. Also you
(32.0 points) 1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points) I babysit two kid for parents that work during the day so if one of the lost their job I would lose mine, If I saved up a financial reserve then I might have to use it to pay for my phone bill or for clothing I need. 2. How many months ' worth of expenses do you think your financial reserve should include? Describe at least two reasons for this decision. (3-6 sentences. 2.0 points) I think I would only need about a month or two because I think I could get another job pretty fast and also I do not have many expenses. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences. 2.0 points) I would rather have a saving account that offered compound interest because I would be making more in the long for due to the fact that this type of interest account adds interest to the interest from the past year. A simple account adds the same amount every year, when a compound adds more every year. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points) Daily compounding because this would add more interest to add interest on. 5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points) A saving account that would help me add on to my money so I wouldn’t have to pay in every paycheck but I can. 6. Describe two financial goals that you would want to meet before you begin investing. Explain why you would want to reach those goals first. (2-4 sentences. 2.0 points) You would want to save up a good amount of money so you could invest in larger products or companies. Also you