5. Savings And Basic Investments

Question 1

Money out in a savings account is safe except it is not gaining what?

Answer 1

Interest

Question 2

What is an investment?(2)

Answer 2

Savings that can earn interest & can generate more income.
Asset whose value could increase.

Question 3

Why invest?(2)

Answer 3

Grows
Stay ahead of inflation

Question 4

What does G.I.C stand for, what is it and what are the benefits?

Answer 4

Guaranteed Investment Certificate
A low-risk low-rate investment that guarantees a rate of return over a fixed period of time.
Benifit: guaranteed

Question 5

What does T.F.S.A. Stand for, what is it and what are the benefits.

Answer 5

Tax free savings account
Tax exempt investment account (maximum contribution 7000$).
Benefits: profits not taxed

Question 6

What does R.R.S.P stand for, what is it and what are the benefits?

Answer 6

Registered Retirement savings plan.
Investment account to help save for retirement.( max contribution 18% or 31 580$)
Benifit: saving for retirement

Question 7

What are the two types of interest? And what are they!

Answer 7

Simple: grows on the principle amount deposited.
Compound: grows on the principle plus the accumulated interest.

Question 8

What are the 5 investment factors? And what are they?

Answer 8

Rate of return: amount it changes in value over a time.
Liquidity: how easily converted into cash.
Risk: uncertain, (less risk= lower returns, high risk can= higher but…)
Cost: fees( less than 2%)
Time: require patience, dedication, research.