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Economic and management sciences

Grade 8

Business, consumer and financial knowledge and skills

Module 12

Methods of saving and calculating returns

Activity 1: to be able to discuss methods of saving and investing, and to be able to calculate the returns [lo 3.6]

Saving

This is keeping of a portion of your income so as not to spend it

Instead of using your total income to pay for goods and services, a portion can be withheld, (saved).

When planning the financial affairs (budget) of a family or business, it is important to plan for saving. This is necessary for planned, as well as unforeseen, expenses that may occur.

There are various ways of saving money so that it can yield a return at the same time. Money can be invested in a savings account at a financial institution, where it will earn interest for the owner. The interest is calculated as a percentage, which may differ from bank to bank. Anyone who is saving money should invest it where the highest interest can be earned.

Savings can also be invested in a fixed deposit. The money is invested at a fixed interest rate for a longer period. As the financial institution can use the money for a longer period of time, they are willing to pay higher interest than for a savings account. The longer the investment term, the higher the interest on a fixed deposit. Interest can be received monthly, quarterly, half-yearly, yearly, or when the investment term expires. In this way a regular income can be ensured. At the end of the predetermined investment term, the investor can decide whether he wants to end his fixed deposit or invest for a further term.

Before one can invest one needs to save.

Investment:

Money can be invested in an institution to make a profit , for example, buying shares. This is called investment.

Companies raise share capital (money) by selling shares in the company to the public. By purchasing shares in a company, one owns a small piece of that company and shares in its profit. The part of the profit paid to shareholders is called a dividend.

The holders of preference shares receive a fixed dividend percentage and have their dividends paid first. Ordinary shareholders only get dividends once preference shareholders have been paid and they do not receive a fixed dividend percentage.

The value (price) of some shares increases because the company does well. There are also shares which decrease in value because that company is not as profitable.

The art of investing in shares and the buying and selling thereof lie in the ability to buy shares, the prices of which later increase, at a low price and selling shares, the prices of which fall, at the right time.

Investing all ones money in only one investment is very risky. For example, if you invest all your money in gold shares and the price suddenly falls, you might not be able to sell them for what you paid. When money is invested in a fixed deposit, the interest rate is fixed. You will not benefit if interest rates increase during your investment term.

Beacause of such risks, it is advisable to invest in more than one product to spread the risks. This can be very expensive. A possible solution lies in investing in unit trusts. This method of investing enables the ordinary investor to invest his money, along with other investors, in a variety of products, for example, shares. Unit trusts sometimes offer a higher return and a better balance because the return consits of dividends, interest and capital growth.

The calculation of returns on various savings methods

Interest is the price paid for the use of someone else’s money. Don’t confuse this with owners interest.

The percentage at which interest is calculated over a period of time is known as the interest rate.

ASSIGNMENT:

Gather information on the interest rates of various savings methods at different banks and compare them by answering the following questions in the table.

1. Calculate the interest that a person would earn if he saved R5 000 over a period of one year.

2. Calculate the interest that a person would earn if he saved R5 000 over a period of 18 months.

FINANCIAL INSTITUTION SAVINGS METHOD
INTEREST YIELD
1 YEAR 18 MONTHS

Assessment

Learning Outcomes(LOs)
LO 3
Management, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.
Assessment Standards(ASs)
We know this when the learner:
3.1 differentiates between financial concepts used in business (e.g. fixed assets, current assets, liabilities, owner’s equity);
3.2 develops leadership and management strategies that will ensure a return on investments;
3.3 completes source documents (e.g. receipts, deposit slips, cheques) and records elementary cash transactions in a statement of receipts and payments;
3.4 uses keyboard skills and function keys in developing, storing and retrieving basic information;
3.5 explains the concept and analyses a statement of net worth;
3.6 investments the various methods of savings and investments (e.g. savings accounts, fixed deposits, shares, unit trusts), and calculates on a variety of investments.

Memorandum

ACTIVITY 1:

Questions & Answers

what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
learn
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
learn
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
Application of nanotechnology in medicine
what is variations in raman spectra for nanomaterials
Jyoti Reply
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
Damian
yes that's correct
Professor
I think
Professor
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
Rafiq
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
Damian
How we are making nano material?
LITNING Reply
what is a peer
LITNING Reply
What is meant by 'nano scale'?
LITNING Reply
What is STMs full form?
LITNING
scanning tunneling microscope
Sahil
how nano science is used for hydrophobicity
Santosh
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
Rafiq
what is differents between GO and RGO?
Mahi
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
Rafiq
if virus is killing to make ARTIFICIAL DNA OF GRAPHENE FOR KILLED THE VIRUS .THIS IS OUR ASSUMPTION
Anam
analytical skills graphene is prepared to kill any type viruses .
Anam
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
Hafiz
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
Bob
The nanotechnology is as new science, to scale nanometric
brayan
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Damian
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
Renato
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
?
Kyle
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
Adin
why?
Adin
what school?
Kyle
biomolecules are e building blocks of every organics and inorganic materials.
Joe
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
research.net
kanaga
sciencedirect big data base
Ernesto
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Source:  OpenStax, Economic and management sciences grade 8. OpenStax CNX. Sep 11, 2009 Download for free at http://cnx.org/content/col11040/1.1
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