Managing Your Money: Saving & Investing (pt4)

The three most common ways teenagers save money
includes a savings account, a certificate of deposit and a US
Savings bond. The difference between these types of
savings “vehicles” is the length of time you have to leave the
money and not touch it. Most banks and credit unions pay
compound interest, which is paid interest on the money you
deposit (or capital) and on the additional interest already
accumulated. Compound interest is a very powerful tool for increasing your financial
wealth over time. It is important to consider the services you need and what banks
offer when you decide where to place your money. Understanding bank fees,
procedures and policies when it comes to deposits, checking accounts, minimum
balances, ATM usage and interest rates are important questions to ask. Banks are
in business and as a consumer you need to know what you are getting for your
money. There are many websites that offer information comparing banks both
locally and nationally on their services, costs and interest paid on savings programs
and money market accounts. This is a great way for teens to develop the “know
how” for keeping good records and managing their money.
Investing is another way to save for long-term goals. It is more than just putting
money aside for the future and involves steps to make money grow at a much higher
return on your investment than a savings account. When you invest, your goal is to
buy things that will increase in value over a period of time. However, investing
always involves some risk – there is never a guarantee your investment will increase
in value. But if you select investments carefully and wisely investing is a proven way
to increase wealth over time. Investing in what you know is the first simple best step
to investing success. Anyone can be an investor, and all you need is to pay attention
to when you buy things. What are some of your favorite products, foods, or
restaurants? These are not only things and places you spend your money on, but
they can make money for you when you buy shares in their company stock. You can
earn money on your investment through capital gain when
you sell the stock at a higher price than you bought it, or if
the company pays dividends, which is a small payment a
company gives to investors out of their earnings—a sort of
reward to its investors. Doing the research is important and
you can find out more about how a public company (a large
company that sells shares in the stock market) is doing by
looking at their annual report .
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Research local banks at and determine Bank fees, minimum
balance, savings programs and interest rates. Identify which services are important
to you and which bank you might choose to open an account.
Decide how much money you are willing to put away each week,
month, or year to meet a long term goal. Using an online
compounding interest calculator from, and
calculate compound interest .
For more training programs & materials in
finance and entrepreneurship: or contact
Marie Hall, [email protected]