Question

Which factor is important to consider when building a savings fund for planned,long term needs ?

Answer 1

Answer:

The answer is using investments to grow your savings.

Step-by-step explanation:

According to the Merriam-Webster Dictionary, investment refers to the outlay of money usually for income or profit. In this case, this investment has some characteristics, such as the long term, meaning that it is necessary to focus on using investment to grow your savings, considering that the profit might not be big enough to make a living of it, it is a good idea to keep saving money and increasing this amount every certain period of time.

Answer 2

Answer:

Principal amount of investment.

Interest rate.

Simple or compound interest.

Time to hold the investment.

Step-by-step explanation:

There are several factors to consider when building a savings fund for planned long term needs.

First of all, we have to consider the amount of principal money we can invest in. It may be a one-time investment or a systematic investment plan. I case of a one-time investment we can easily calculate the investment amount but in case of monthly or yearly investment, we have to be sure that we will be able to invest the amount for the said period of time.

Second is the interest rate that the fund is giving i.e. APR of the fund. Again, take care to identify whether it is a simple interest or compound interest. Obviously the compound interest is better than simple interest as it gives more interest.

The third is the time for which you can hold the money without withdrawal. (Answer)