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The types of savings accounts and rate of return

Reasons why you should to use savings accounts

  • Interest:

The money you put into a savings account earned interest.

  • Yield:

Earnings on savings measure by the rate of return, or yield.

Reasons why you should to use savings accounts

Types of interest

Types of interest

There are two types of interest:

  • simple;
  • compound.

For example, if you can $10,000.00 in savings at 6 % annual interest. After 10 years you would yearn $6,000.00 if interest rate was simple, and $6.895,00 if interest rate was compound.

Three types of savings accounts

Types of saving accounts

Regular savings accounts

Regular savings accounts

  • allow to deposit or withdraw money;

  • low minimum deposit;

  • the interest rate can be varies;

  • a service fee.

Certificate of deposit

Certificates of deposit

  • specified amount of money;
  • set period of time;
  • penalty for withdrawal before maturity date;
  • fixed interest rate.

Money market fund

Money market funds

  • it’s a kind of mutual fund put into a variety of short-term debt;
  • the interest rate varies;
  • you can withdraw your money at any time.

In US you can also write checks on the account.

In Russia, the analogues of money market funds are mutual funds and exchange-traded funds.

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