SAVINGS AND INVESTMENTS

Savings

is a very important feature in economy. In a barter economy, people can only save goods, which may spoil or to be stolen. But money economies have mechanisms in a place for people to save.

Basic Concepts in Savings

1. Money - This is a means of currency. You can exchange money for a product or a service.

2. Income - This is the money you receive from your work or profits or interests from your businesses.

3. Saving – This is the act of putting aside a part of the disposable income for the future use. While savings is the money put aside.

Reasons Why It is Important to

Save

By saving, you will have money to get when you need it in the future.

By saving, you earn some more, even if it is just a small amount.

By saving, you can help people with their business startups and other money needs.

How to Save?

Have a plan or budget for your money coming in.

The budget should apportion a certain amount as savings.

You may open a savings account with a bank with the first P1,000 or P5,000 you have accumulated.

Investment

In economics, means businesses spending for the production and accumulation of capital goods and additions to inventories such as new plants, machinery, etc.

Basic Concepts in Investing

1. Interest – This is the money that you will lend money to others given a certain period.

2. Compounding - This is the process whereby the interest you earn also earns money for you.

3. Inflation – This is the general increase in the prices of products and services. It is important to always be aware of the inflation rate.

Where to Invest ?

Choosing where to invest is

always a question of how much you would want to invest and what risks you are willing to take. Here

are some ways to invest your money.

Bank Accounts – You can invest your money in the bank through savings account, which earns up to 4% interest per year, and where you can easily withdraw your money.

Treasury bills - are bonds issued by the government for the purpose of acquiring money for its projects.

Mutual Funds – These are collection of stocks or bonds, which pooled by an investment manager to be invested in companies that they believe will provide them with necessary returns.

Commodities – These include anything that you can buy and then sell, such as silver, jewelry, food, cars, and collectibles.

Real Estate – Properties such as land, house, apartment, or buildings are part of real estate.

Employment, Unemployment, and Underemployment

Any country has a labor force,

which consists of persons fifteen years old and older, but who are

not incapacitated or are in institutions, who are employed or

seeking employment.

A primary economic objective of

any government is full employment, which means putting

people where they can gainfully work.

Employment rate – is the percentage of the labor force who is currently employed.

Unemployment rate – is the percentage of the labor force who is not currently employed.

Underemployment rate – means the employment of workers with high skills and abilities in low wage and low earning jobs

Current statistics shows that the

employment rate in the Philippines is at 91.9%, which is about 32.4 million

people employed; unemployment rate is at 8.1%, comprising 2.8 million

people; and underemployment rate is at 21.3%, which is about 6.9 million

workers.

Measures of National Income and Output

In economics, the national income and output are measured to

determine the total value of goods and services produced in an

economy.

Gross National Product

is the total and final output of land, labor, capital, and entrepreneurial ability produced by the country’s citizens, whether these are produced inside the country or abroad.

Country GNP

1. United States $ 12.1 billion

2. United Kingdom $ 2.0 billion

3. Germany $ 1.9 billion

4. Japan $ 1.9 billion

Top 4 countries in terms of GNP

Gross Domestic Product

Comprises the value of total goods and services produced within the boundaries of a country, whether these are produced by the citizens of that country or by foreigners.

Country GDP

1. United States $ 11.6 billion

2. Japan $ 4.6 billion

3. Germany $ 2.7 billion

4. United Kingdom $ 2.1 billion

Top 4 countries in terms of GDP

Principal Methods of Measuring the GNP

and GDP

Expenditures Approach – The estimates of all types of spending on goods and services by households, businesses, government, and by the people outside a country are all added up.

Income Approach – The sum of the estimates of all earnings, including total wages and salaries, profits, and incomes from rentals and interest is arrived at.

Output or Product Approach – The sum of all output of all individuals and organizations producing goods and services is added with the costs for raw materials and depreciation subtracted.

Importance of Measuring

National Income

1. It enables us to keep track of the economy, including the level of production in a given period of time.

2. It allows us to look at an economy’s performance over a long period of time.

3. It provides lawmakers and government policymakers with a basis on which to base their economic policies and legislation that would promote the betterment of the economy of the country.

While national incomes are just estimates, they still provide

people with information by which to base how their economy is

growing, which they may use for their personal decisions.

Thank you for listening!