Saving and Investing

Name: Sidnie Hitchcock

Date: 2/23/18

1. Graded Assignment

2. Assignment 4: Saving and Investing

3. Instructions

Save the assignment to your computer with your name at the end of the filename (e.g., Graded_Assignment_U14_Alice_Jones.doc).

Type the answers to the assignment's questions. Use complete sentences unless the question says otherwise. You will have more than one day to complete an assignment. At the end of each day, be sure to save your progress.

Review Lesson 4 of the Course Overview for instructions about turning in your assignments.

1. Assignment

Total score: ____ of 32.0 points

(Score for Question 1: ___ of 2.0 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)

Answer:

Having to buy a new car is one example. Another would be if someone in your family got very ill and they have many doctor bills.

(Score for Question 2: ___ of 2.0 points)

1. 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)

Answer:

I think 6 months is a good amount in case you lose your job. This way you have more money to live off of until you get another job. Another reason is if there were any kind of disaster like a fire because insurance only covers so much.

(Score for Question 3: ___ of 2.0 points)

1. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences)

Answer:

I'd prefer compound interest. Over time compound interest will build up more interest into the account. After a while you make interest on the interest you have.

(Score for Question 4: ___ of 2.0 points)

1. 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)

Answer:

I would want quarterly compounding because since it happens more often the interest turns to principal faster so it earns interest and the principal increases faster.

(Score for Question 5: ___ of 2.0 points)

1. Which strategy for saving do you think would work best for you? Why? (3-6 sentences)

Answer:

I think paying myself would work best for me because if I kept the money I would forget to pay myself and spend it elsewhere.

(Score for Question 6: ___ of 2.0 points)

1. 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)

Answer:

I would want a budget set aside for housing and educational needs. I would also want to have a financial reserve. I would need these before investing so I don't have the risk of losing everything  and so I don't spend much

(Score for Question 7: ___ of 2.0 points)

1. Describe at least two factors of an investment that you would want to consider before putting money into that specific investment. (2-4 sentences)

Answer:

Before you invest your money into something you should know the business. Know what they do and what their plans are. You also should know who runs the business to know if they are trustworthy.