What I may already know: • Saving means putting some money aside. • People save their money with different financial institutions.
Learning Intentions
In this chapter, I will learn: • Why people save money. • Tips for saving money. • How to calculate simple and compound interest. • How to calculate Deposit Interest Retention Tax (DIRT). • The difference between saving and investing. • The savings and investment options that are offered by financial institutions.
Key Words: Interest Balance
Simple interest Compound interest
Annual Equivalent Rate (AER)
Compound Annual Return (CAR)
Fixed interest rates Variable interest rates
Deposit Interest Retention Tax (DIRT)
Saving Investing
Deposit account Share account
WHY DO PEOPLE SAVE MONEY? Savings are the part of a person’s income that they do not spend.
i There are a number of reasons why people save:
• To have money for planned future expenditure, such as annual car insurance or school expenses.
• To have enough money to buy an item that we want or for a holiday. 82
