Choosing to Save

By Ivy Huck

What is the difference between savings and investing?

Saving is a portion of your income not spent on consumption, and investment is the purchase of assets with the goal of increasing future income.

What is liquidity? Give an example.

Liquidity is how easily an asset can be converted to cash.

What is net worth?

The amount of money left when liabilities are subtracted from assets.

What is an asset? Give an example.

Everything that an individual owns that can be sold for cash, such as houses or cars.

What is a liability? Give an example.

A debt.

When talking about savings & investing, describe interest and interest rates.

Interest is the price of money, and interest rates are the percentage rate


paid on the money invested or saved.

What portion of your income should you save?

10% to 20%

Why are saving and investing important?

So you can get more stuff