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Home/Business & Economics/In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months

In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months

Saving to buy a new house in seven years would be the best savings account investment to earn interest.

Explanation:

A savings account is one that pays interest but cannot be directly used for purchases or other exchanges. As such, when deciding to create such an account for some purpose, one should compare the interest rate with the growth of the target sum over time.

Reasons to Save.
Primary Reasons for Opening Savings Accounts (Source: https://www.creditloan.com)

Savings accounts typically have an interest rate that is too low to be meaningful in the short term. Therefore, saving for a few months would not make a significant difference.

A car is a big enough purchase to warrant the use of a savings account, but their prices grow too quickly for the investment to be worthwhile. Houses do not have the same issues, and therefore, they are a good investment. As for retirement, those savings plans do not come with interest and, therefore, are not applicable.

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Academic.Tips. (2022) 'In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months'. 30 January.

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Academic.Tips. (2022, January 30). In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months. https://academic.tips/question/in-which-situation-would-a-savings-account-be-the-best-investment-to-earn-interest/

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Academic.Tips. 2022. "In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months." January 30, 2022. https://academic.tips/question/in-which-situation-would-a-savings-account-be-the-best-investment-to-earn-interest/.

1. Academic.Tips. "In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months." January 30, 2022. https://academic.tips/question/in-which-situation-would-a-savings-account-be-the-best-investment-to-earn-interest/.


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Academic.Tips. "In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months." January 30, 2022. https://academic.tips/question/in-which-situation-would-a-savings-account-be-the-best-investment-to-earn-interest/.

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"In which situation would a savings account be the best investment to earn interest? a) saving for retirement in twenty years b) saving to buy a new car in three years c) saving to buy a new house in seven years d) saving in July to buy holiday gifts in a few months." Academic.Tips, 30 Jan. 2022, academic.tips/question/in-which-situation-would-a-savings-account-be-the-best-investment-to-earn-interest/.

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