Personal Finance Essay

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Assignment 4: Saving and Investing (32.0 points) 1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points) A: One time that my dad had to use his financial reserve was when he had to go to surgery. My dad was doing some heavy work and then one day he felt a muscle pop, so he went to the doctor and the doctor told him he had hornia. The Doctor told my dad that he had to go under surgery to fix his injury, but my dad did not have the money so he had to use the financial reserve that he has been saving up. After the surgery, my dad went back to saving up for another financial reserve for emergencies . 2. How many months' worth of expenses do you think your financial reserve should include? Describe at least two reasons for this decision. (3-6 sentences. 2.0 points) A:My financial reserve would be three months or less worth of expenses. One reason why I don’t need a big financial reserve is because my expenses are too little because I am just a teenager. Another reason is because I know a lot of people who work in companies and private businesses so I could easily find a job. 3. Would you rather have a savings account that offered simple interest, or an account that offered compound interest? Why? (3-6 sentences. 2.0 points) A: I would rather have a saving account that offers compound interest. I would choose compound interest because I end up with more money over time , than a simple interest one. In compound interest the interest is added to the principal in the account so each year the interest money that is added to the principal account increases each year. In simple interest the interest money each year stays the same, so I don’t make as much money as in a compound interest saving account. 4. If you were opening a savings account

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