Help
Options
Question
What is the 1st rule of savings?
click to flip
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't know
Question
The concept of Compound Interest
Remaining cards (25)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Econ Test
Taxes, Saving, & Investing Study Guide
| Question | Answer |
|---|---|
| What is the 1st rule of savings? | You must pay yourself before any other bills. |
| The concept of Compound Interest | interest earned on top of last years (& the years before that) interest. |
| Rule of 72 formula | 72 / interest rate |
| What does the rule of 72 show | how long it would take to double your money if it is left in an interest earing account |
| 1st question to ask before opening a savings account | How long will you be keeping the money in the account? |
| 2nd question to ask before opening a savings account | How often will you want to withdraw the money? |
| 3rd question to ask before opening a savings account | How much money will you keep in the account? |
| Basic savings account | has the lowest interest rate but fewer restrictions |
| Higher yield savings account | has higher interest rates but more restrictions |
| Certificate of deposite (CD) | earn higher interest rates than savings account, but is very difficult to withdraw (may come with a fee) |
| Bond | a company issues the bond with the promise of paying the money back to the buyer of the bond with additional money |
| 3 Components of a Bond | Face value, maturity date, coupon rate |
| Face value | total amount the issuer of the bond will repay to the buyer |
| maturity date | when the issuer of the bond must pay the buyer face value |
| coupon rate | the percent of face value that the bond buyer receives each year |
| Corporate bonds | issued by a private company |
| Municipal bonds | issued by state and/or local governments |
| Treasury bonds | issued by federal government (safe investment) |
| Stock vs. bond | buying a stock gives the buyer partial ownership and buying a bond is a debt instrument that makes the owner pay you back with interest |
| Why do we pay taxes | taxes pay for the government, the government then provides citizens with defense, transportation, education, a legal system (etc.) |
| Income tax | tax on a citizen's income, the main way our gov. is funded |
| sales tax | additional money applied to most things we buy (not food). They are mostly state and local taxes |
| Property tax | tax on people's home, pricier house = higher tax (usually goes toward education) |
| Proportional tax | flat tax. everyone pays the same percentage of income |
| Regressive tax | as income increases, a smaller percentage of income is taken. the more money you make the less money you pay towards taxes |
| Progressive tax | as income increases, a larger percentage of income is taken. the more money you make the more money you pay towards taxes. |
Created by:
CarlyStrahm
Popular Economics sets