The Joneses have some money set aside for emergencies. The Joneses have $50,000 to invest right now. They would like to earn more interest on it, but require immediate access to it at all times. They would also like to invest in something that is not FDIC insured in order to make more money by taking more risk. They do not want to invest in stocks, bonds, or funds that are composed of stocks or bonds.

What type of savings tool would you recommend? Why?

Compounding interest refers to the actions of adding the earned interest to the principal amount at the end of a period. The principal amount will increase at the beginning of every new period. An increase in the principal amount every new year means that the interest earned in that year will be higher than the previous season.

A compound interest-earning account will satisfy the Joneses investment requirement. The account will earn high interest due to the compounding effect. They will have access to the money anytime they require it as the account does not restrict withdrawals.

Аноним Аноним · Answer 2 · 2020-03-29T19:34:15+02:00

Answer:

A Compound Interest Savings Account

Explanation:

A compound interest savings account can help you grow your money over time, whether you're working with a large or small balance. Compounding means you earn interest on both your principal — the amount you've saved — and the interest you've already accrued.

Looks like the Joneses have a solution now!

EXTRA:

Ok here are some accounts to get familiar with:

Certificate of Deposit: An account at a depository institution that is used for a fixed period of time and allows restricted access to the funds deposited

Checking Account: An account at a depository institution that provides an easy method for withdrawal and depositing money

Money Market Deposit Account: An account at a depository institution that usually has minimum balance requirements and tiered interest rates

Savings Account: A depository institution account that is designated to hold money not spent on current consumption

QUESTIONS:

Why are savings tools ideal for storing emergency savings?

They are secure - Depository institution is insured

They are liquid - Easily accessible

DEFINITIONS:

Liquidity - How quickly and easily an asset can be converted into cash

Savings Tools - Accounts offered by depository institutions whose main purpose is to help people manage their money

Tiered Interest Rate - The amount of interest earned depends on the account balance

Hope this helps!