Assignment 3 personal finance 
Assignment 3: Saving and Investing
(20.0 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) when a person loses their job they lose their source of income. When a person loses their income they’ll need to dip into their financial reserves. They need to have a large enough reserve to pay their expenses until they find new work.
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) my financial reserve should have at least 3 months worth of expenses. I need my financial reserve to be large enough to pay my expenses until I can find new work. I also need a large financial reserve in case the economy worsens.
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) I would rather have an account that offered compound interest. I would rather have a compound interest account because their growth is exponential. The growth of a compound interest account speeds up over time.
4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points) I would prefer daily compounding. The faster the interest compounds the faster the money grows. I’ll have a larger profit sooner if the interest compounds daily.
5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points) I would choose the pay yourself first method. I would choose this method because I think it would be easy to keep track of how much I’ve saved. I would also choose this method because I think it would save the most money.
6. Describe one financial goal that you would want to meet before you begin investing. Explain
(20.0 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) when a person loses their job they lose their source of income. When a person loses their income they’ll need to dip into their financial reserves. They need to have a large enough reserve to pay their expenses until they find new work.
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) my financial reserve should have at least 3 months worth of expenses. I need my financial reserve to be large enough to pay my expenses until I can find new work. I also need a large financial reserve in case the economy worsens.
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) I would rather have an account that offered compound interest. I would rather have a compound interest account because their growth is exponential. The growth of a compound interest account speeds up over time.
4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why? (3-6 sentences. 2.0 points) I would prefer daily compounding. The faster the interest compounds the faster the money grows. I’ll have a larger profit sooner if the interest compounds daily.
5. Which strategy for saving do you think would work best for you? Why? (3-6 sentences. 2.0 points) I would choose the pay yourself first method. I would choose this method because I think it would be easy to keep track of how much I’ve saved. I would also choose this method because I think it would save the most money.
6. Describe one financial goal that you would want to meet before you begin investing. Explain