Essay about The Interest Rate Of A Savings Account

Essay about The Interest Rate Of A Savings Account

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The interest rate of a savings account at a commercial bank is 0.1%. The interest rate being so low indicates that there is low risk with the people’s money. Because money in saving account is F.D.I.C. Secured up to $250,000, it is highly unlikely for a person to lose their money in it at all.

Checking accounts in commercial banks have no interest on their money. In general the money in checking accounts are high in liquidity, which makes them easy to use for paying bills. Putting money in a checking account puts your money at no risk, and guarantees a safe place to store your money.

A Certificate of Deposit, also known as CD, is a different type of account. You can put your money in it from three months to up to five years. CD’s are F.D.I.C insure, which means there is low risk on your money. Low risk means low return, so they interest rate on CD’s are also low; however, the interest rate is still higher than interest rates in savings accounts. The money in CD’s are not liquid until their maturity date, which is a date the set by the person putting the money into the CD.

There are several advantages to keeping your money in a Certificate of Deposit. First of all, it has higher interest than a savings account. CD’s are also safe because they are F.D.I.C insured. Finally, CD’s make sure people keep their hands off their money until the maturity date.

A United States Savings Bond are non-marketable securities, sold and bought by authorized redeeming and issuing agents of the United States Treasury Department. In a U.S. Savings Bond you lend your money to the federal government from six months to up to thirty years. There are two types of U.S. Savings Bonds: series “I” which has an adjustable interest rate, and series “EE” whi...


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...keeps them safe from theft and fraud.

Stocks can be resold in secondary markets. Secondary markets are where investors can purchase assets or securities from investors rather than purchasing them directly from the issuing company. The New York Stock Exchange, NASDAQ and Dow Jones are all examples of secondary markets.

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks.

The Dow-Jones is a stock market index created by Wall Street Journal editor Charles Dow. The Dow is a barometer of how shares of the largest United States companies are performing.

The Rule of 72 is a way for people to estimate how many years it takes to double their money at a given annual rate of return. By dividing their annual rate of return by 72, investors are able to roughly estimate how many years it takes for their initial investment to double.

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