Smart Investing: Savings, Deposits and Funds
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Smart Investing: Savings, Deposits and Funds
Year 10 Commerce Financial Literacy for Young Australians Building Your Financial Future
What Does 'Investing' Mean to You?
Think about your current understanding Consider different types of investments What are your financial goals?
Learning Objectives
Understand different types of bank accounts and their features Compare savings accounts, term deposits, and managed funds Analyze interest rates, risks, and investment terms Create visual comparisons of investment options Match investment types to different investor profiles
Why Do We Need to Invest?
Inflation reduces purchasing power over time Money sitting in low-interest accounts loses value Building wealth for future goals Financial security and independence Compound interest - Einstein's 'eighth wonder of the world'
The Power of Compound Interest
'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.' - Albert Einstein
Types of Investment Options
Bank Accounts (Savings, High Interest) Term Deposits Managed Funds Each has different risk levels Each offers different potential returns Understanding the risk-return relationship
Research Activity: Commonwealth Bank Investigation
Visit Commonwealth Bank website Research current interest rates for: • Regular savings accounts • High interest savings accounts • Term deposits (various terms) Record your findings in your workbook
Savings Accounts - The Basics
Easy access to your money Low risk, low return Interest calculated daily, paid monthly No fixed term commitment Perfect for emergency funds Typical rates: 0.05% - 2.5% p.a.
High Interest Savings Accounts
Higher interest rates than regular savings Often require conditions to be met May need regular deposits Bonus interest for no withdrawals Online-only banks often offer best rates Typical rates: 1.5% - 5.0% p.a.
Savings Accounts: Pros vs Cons
{"left":"PROS: Easy access to funds\nPROS: Very low risk\nPROS: Government guaranteed up to $250,000\nPROS: No fees on most accounts","right":"CONS: Low interest rates\nCONS: May not keep up with inflation\nCONS: Restrictions on high-interest accounts\nCONS: Temptation to spend easily"}
Term Deposits - Locking in Returns
Fixed interest rate for set period Terms from 1 month to 5 years Higher rates than savings accounts Money is locked away - no early access Government guaranteed up to $250,000 Interest paid at maturity or annually
Term Deposits Research
Use the MoneySmart website Research term deposit features: • Minimum amounts required • Interest rates for different terms • Early withdrawal penalties • How interest is calculated Complete Worksheet 2.4 questions