To piggy or not to piggy
HEY TEENs, once again TEENage has some more insightful information to assist with your savings and investment of money with various corporations.
There is a difference with saving and investing; saving is the process of setting aside a portion of current income for future use over a given period of time while investing is the act of putting in money or capital in an enterprise with the expectation of profit and this can be in the form of stocks or bonds. Understanding interest rates when investing, is very important as not only can it be a form of encouragement but you may also know of your profit.
Many of you many not know the difference between saving with a bank, a building society, or a credit union, but may have some form of idea or association with them through your parents or school savings. However another way of saving funds is with a group of friends in the well-known ‘pardner’.
When saving with a financial institution many persons want to know that it is credible and reliable. While a bank, building society and credit union may have similar definitions they differ is some way.
A bank is a financial institution that gathers savings and pays interest to savers. It channels the savings of individuals who wish to consume less than their incomes to borrowers who wish to spend more than they earn. It is owned and operated so that their depositors may benefit through interest. Similarly, a building society is a cooperative whose members collect their resources in order to offer financial assistance such as mortgages and small business loans. While a credit union is a cooperative financial institution that is owned and controlled by its members, and operated for the purpose of promoting saving. It also provides credit at reasonable rates, and other financial services to its members where loans can be obtained from their combined savings.
‘Pardner’, however, is a group of people regularly depositing sums of money over a fixed interval with a principal individual, known as the ‘banker’, in a central fund. Each person in the group takes a turn in withdrawing their ‘hand’, usually the total amount collected for that week or month. It tends to operate amongst friends or families and it is more frequently used for saving for smaller purchases.
When saving or investing here are a few key things to keep in mind:
* The minimum amount required to open an account;
* The fees required for maintaining the account
* Comparable yields over identical time periods;
* Available interest rates;
* The terms governing the account such as convenience and how easily can one withdraw the funds and if there are there penalties for withdrawal.
Editor’s Notes: Look out for the different plans and packages the various corporations have to offer so that you may start your journey of life-long saving and investing.