E CS 19

Saving and Investing

Saving and investing strategies help individuals achieve personal financial goals.

Content Statement

19. Banks, brokerages and insurance companies provide access to investments such as certificates of deposit, stocks, bonds and mutual funds.

Content Elaborations

Owning certificates of deposit (CDs), stocks, bonds and mutual funds are ways that investors can build wealth. Several types of financial institutions provide access to these tools.

CDs can be purchased through banks or brokerage firms. CDs are fixed-income investments for a term with a fixed amount of interest paid by the financial institution. At the end of the term, the financial institution pays the principal and interest earned. CDs are insured by the federal government.

Stocks are shares of a company that can be purchased by investors through brokerage firms. Investors are paid dividends and can make a profit if sold higher than the purchase price.

Bonds are investment instruments that are generally low- yield and low-risk that organizations and governmental units use to borrow money over prescribed terms.

Mutual funds and annuities hold diversified investments in stocks, bonds and money-market accounts to limit risks for the investor. They can be purchased through brokerage firms or insurance companies.

All of these investments generally involve a fee from the financial institution. The fees pay for the institution’s expertise and time. Investors who are knowledgeable about stocks and mutual funds and have time to monitor their investments can make their purchases online.

Banks and credit unions provide basic financial services to individuals including savings, investments, loans and other fundamental forms of money management.

Expectations for Learning

Explain the access that banks, brokerages and insurance companies provide to investors for certificates of deposit, stocks, bonds and mutual funds.