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) If someone were to have a sudden, serious illness that required a long hospital stay with large medical bills and left them unable to work, they would have to use money from a financial reserve like a savings account or a 401k plan to pay the bills. 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) * You should have a fully funded emergency fund of 3-6 months of living expenses. The reason for building up this reserve?
In a money market account you invest your money in low risk investments with predictable interest rates. What is a liquidation policy? (0.5 points) A liquidation policy tells you when and how you’re able to remove money from the account. What is simple interest? (0.5 points) Simple interest is gained only on the principal amount of an account.