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You will think about what kind of saving instru- __1__ ment to use or what kind of investment to make.
By putting your money in some kind of savings instrument or investment, you can set aside small amount of mon- __2__ ey regularly and the money will earn interest or dividends.
Interest refers to the amount what your money__3__ earns when it is kept in a savings instrument.
Divi- dends are payments of part of a company’s earnings to people hold stock in the company. A savings instru- __4__ ment has an “interest rate ” associated with it; this refers to the rate which the money in the instrument in- __5__ creases during a certain period of time.
Principal refers to the facial value or the amount of money you __6__ place in the savings instrument on which the interest is earned.
Every type of savings or investment has some risk that the return will be less than needed or expected.
Federally insured savings accounts are safe and guaranteed up to $100,000 by the U.S. Government.
Therefore, they may have lower interest rates, making __7__ it hard to save large amounts of money for college. __8__
Bonds and stocks often have higher returns than savings accounts or EE saving bonds but are more riskier. __9__
You can reduce the risks of these kinds of investments by starting to save early. The earlier we begin the less __10__ money you will have to put aside each month and the more total savings you will accumulate.
