PFL Review

Savings account are the lowest interest rate for savings tools

Checking account has lower interest rate than any saving or investing method

The U.S. Department of the Treasury sells savings bonds. These bonds are backed by the government and will not drop below their face value cost if redeemed after the full maturation date.

The stock market is a place where stocks of publicly listed companies are traded. Prices and the value of the stocks vary from day to day on the stock exchange depending on the price the buyer and seller agree upon.

How are U.S. Treasury Department savings bonds different from stocks bought on the stock market?

Bonds are a low risk/low reward

You won't make tons of money off of them, but you will not lose money either

While a CD is very low risk, it is a savings tool NOT investment

Government bonds are much less risky than mutual funds or stocks.

Mutual funds offer the potential for greater reward than a CD; however, they are also much riskier and have the potential to lose all the money he has saved

He would switch to a CD because while he won't make more money, the money will be safe and available when Megan goes to college

Read too quickly/trying to finish the test

You want a lower interest rate on a loan because over time, that means you pay less