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Financial Goals: My first financial goal is to save $5,000 for a vacation, which is a short-term goal (1 year). My second goal is to contribute $10,000 to my retirement account over the next five years, making it an intermediate goal. Lastly, I aim to purchase a home within the next ten years, which is a long-term goal.
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Choosing a Bank and Account Type: I would consider the bank’s fees and interest rates, as these can significantly impact my savings. Additionally, the convenience of branch locations and ATM access is important for easy access to my funds. Lastly, I would assess the bank’s customer service reputation and online banking features for ease of managing my account.
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Ways to Withdraw Money from a Checking Account: I can take money out of a checking account by using an ATM to withdraw cash directly. I can also write a check to another party, which they can deposit or cash. Another option is to use a debit card for purchases, which deducts funds directly from my checking account.
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ROI Calculations: a. For the government bond: ROI dollar amount = $54 - $50 = $4. ROI percentage = ($4 / $50) * 100 = 8%.
b. For the stocks: ROI dollar amount = $115 - $100 = $15. ROI percentage = ($15 / $100) * 100 = 15%. -
Investments: I want to invest in index funds, which are equity investments because they represent ownership in companies and aim for long-term growth. I chose index funds for their potential for diversification and lower fees compared to actively managed funds. Additionally, I plan to invest in a corporate bond, which is a debt investment, as it provides fixed income with typically lower risk than stocks. I believe corporate bonds are suitable for balancing my investment portfolio. Lastly, I want to invest in real estate, which is considered an equity investment, as it can generate rental income and has the potential for appreciation over time. This type of investment aligns with my long-term goal of financial stability and wealth accumulation.
In Section 4, you learned about money management. Now, you'll apply what you learned.
1. List at least three of your financial goals. Explain whether they are short-term, intermediate, or long-term. (1-3 sentences. 3.0 points)
2. List at least three things you would consider when choosing a bank and account type. (1-3 sentences. 3.0 points)
3. Describe at least four ways you can take money out of a checking account. (1-4 sentences. 2.0 points)
4. Calculate the ROI dollar amount and percentage for these example investments.
a. You invest $50 in a government bond that says you can redeem it a year later for $54. Use the instructions in Lesson 3 to calculate the ROI dollar amount and percentage. (2.0 points)
TIP: Subtract the initial investment from the total return to get the ROI dollar amount. Then divide the ROI dollar amount by the initial investment, and multiply that number by 100 to get the percentage.
b. You invest $100 in stocks and sell them one year later for $115. Use the instructions in Lesson 3 to calculate the ROI dollar amount and percentage. (2.0 points)
TIP: Subtract the initial investment from the total return to get the ROI dollar amount. Then divide the ROI dollar amount by the initial investment, and multiply that number by 100 to get the percentage.
5. Describe at least three investments you want to make with your income. Explain whether each one is an equity investment or a debt investment, and explain why you chose these particular types of investments. (1-6 sentences. 3.0 points)
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