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is depositing your money into a financial institution for safe keeping and to earn interest |
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is buying something with the expectation that it will make money for you. |
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Interest is an amount paid to use someone's money usually a percentage of the amount deposited (aka principle). |
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Examples:
work bonuses
inheritances
tax refunds
unexpected chuncks of money |
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You can check the amount at any time |
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little risk
small amount of interest |
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money market deposit account |
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low risk
higher interest than saving accounts |
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low risk
insured
higher interests than money market
interest uis the same over a long span of time |
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set prices ($25, $30)
fixed intrerest over a set of years (30 years) |
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the more often your money is earning interest the faster and bigger your account will grow. |
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simple interest rate formula |
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I=P x R x T
I- interest
P- principle(original amount)
R- interest rate
T- time |
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the actual return on an investment when compound interest is taken into account |
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compound interest formula |
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A=P(1+r/n)^nt
A- final amount
P-prinicple
r- annual interest rate
n- number of times interest is compounded
t- time |
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lose of money value
rises food gas clothes prices |
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