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| To spread your money around in order to lower the risks of your investments. |
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| The availability of your money. Cash is very liquid; real estate is not. |
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| Investors pool their money together to invers it in the stocks of 90 to 200 companies in each mutual fund. |
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| The probability of getting your money back from an investment. |
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| The higher the risk, the greater the expected return on investment. The lower the risk, the lower the return. |
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| A piece of ownership in a publicly traded company. |
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| Fees paid to the mutual fund company when selling a mutual fund. |
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| Quarterly payout of profits by a company to all shareholders. |
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| For a mutual fund, an annual percentage the fund takes as payment. Expense ratios of different funds can be compared to find the best value. |
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| The FDIC(federal Deposit Insurance Corporation) id a government agency that insures depositors' money. Banks and savings and loan companies that are FDIC-insured pay a percentage of their deposits to the FDIC to pay for the insurance. |
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| Fees paid to the mutual fund company as an entry requirement into certain mutual funds |
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| Rise in prices that effectively makes cash have less buying power. |
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| A safe, low-return investment available from banks. There is generally no minimum deposit for thi stype of account, making it per |
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| On a mutual fund statement, a comparison of how the fund has done compared to its value on the first of the year |
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| For a savings account, the percentage of interest earned annually. For a stock, the annual dividend divided by the share price. |
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| A time with generally falling stock prices. |
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| stocks issued by solid and reliable companies with long records of growth and stability. These stocks usually pay small but reliable dividends and maintain a steady stock price. |
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| Money loaned to the government, corporations, or municipalities that pays he investor interest. Different types of bonds can be more or less risky, and bonds can have high yields or low yields. |
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| a time with generally rising stock prices. |
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| Stocks of companies that produce such staples as food, beverages, and pharmaceuticals, and insurance companies. These businesses may not grow enormously fast, but they should keep their value relatively constant. |
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| Stocks of companies that generally do not pay dividends or pay only very small dividends. These companies plow their profits back into growing the business. They can be new and entrepreneurial companies, and can experience high growth or financial failure. |
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| The collection of investments you personally hold, including stocks, bonds, money market accounts, and savings accounts. |
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| Stocks of very large companies such as Wal-Mart, General Electric, and IBM, that have a market capitalization of between $10 billion and $200 billion. |
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| A collection of investments tailored to your investment risk tolerance and time horizon. Any plan only works as well as your ability to stick with it, including sometimes selling "winners" to keep your overall spread of investments to where you want it to be. |
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| Stocks of largely unknown companies with smaller market capitalization, that is, dollar value of total stock ownership. Small-cap stocks generally have a market capitalized of between $300 million and $2 billion. |
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| Separate types of investments, such as stocks/stock mutual funds, bonds/bind funds, money market accounts, and international stocks/international stock funds Each asset class has typical risk and returns, and a certain investment within that class may perform better or worse than its peers. |
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| when you sell a stock for more than you paid for it, the difference is called a capital gain. capital gains are income that must be reported on taxes. |
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| when what you sell a stock for is less than what you originally paid for the stock, the difference is called a capital loss. |
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| a share in a company's assets and profits. The ownership of a publicly traded company is split up into the shares of stock being traded and held. |
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| money paid by a corporation to each shareholder. typically given four times a year, these distributions of company profits can be used to reinvest in more shares of the company. |
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| A mutual fund or account that invests in short-term, liquid investments. these funds generally pay better than a savings account with a bank, but less than a typical stock mutual fund. these funds are considered very low risk. |
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| A mutual fund is a pool of stocks, bonds, and other securities managed by an investment company. Individuals can buy shares of the fund and profit from its investment gains. |
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| An incorporated business owned jointly by all stockholders. Stockholders vote on who will oversee the company as a Board of Director. Usually, the company profits are paid out in form of dividends. |
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| The annual amount of money an investment makes, given as a percentage. For example, a $100 investment that is worth $112 the next year had a 12% return. |
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| The annual amount of money an investment may lose value. less risky investments have a lower rate of return. |
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| Monetary increase that an investment makes. If an investment loses value, it is called a negative return. |
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| a type of employer-sponsored retirement plan in which money is contributed on a pre-tax basis and all earnings are tax deferred. defined contribution plan offered by a corporation to its employees, which allows employees to set tax-deferred income for retirement purposes; in some cases, employers will match their contribution. |
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| an investment contract made with the issuer (e.g., insurance company); type: immediate, deferred, fixed, variable. |
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| a type of retirement plan, usually a pension, in which the payment amount is guaranteed. |
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| defined-contribution plan |
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| a type of retirement plan in which the amount invested in the plan is controlled by the employee, with no guarantee of benefits. |
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| employer-sponsored retirement plan |
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| a savings plan for retirement that is offered through a company's benefits package; contributions are usually matched by the company. |
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| IRA(Individual Retirement Account) |
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| a type of retirement-savings plan that is not usually done through an employer; traditional IRAS are tax deduction and earnings are tax deferred. |
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| a retirement savings plan for self-employed professionals or owners of small businesses; it affords the same tax benefits as a 401(k) |
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| A fixed sum paid regularly by an employer to an employee after retirement. |
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| Permanent withdraw from the workforce. |
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| this type of individual retirement account is not tax deduction, but may not be subject to income tax upon withdraw. retirement account funded with after-tax dollar that subsequently grows tax free. |
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| Educational Savings Account |
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| after-tax college fund that grows tax-free for education uses; eligibility based on parents' annual income. |
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| Individual retirement arrangement (IRA) |
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Definition
| tax-deferred arrangement for individual with earnings income and their non-income-producing spouses; growth is not taxed until money is withdrawn; contributions to an IRA are often tax-deductible. |
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| a type of retirement plan where you put money n before taxes have been taken out, but must pay taxes on the money at the time of withdrawal. |
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| movement of funds from a tax-deferred retirement plan from one qualified plan or custodian to another; incurs no immediate tax liabilities or penalties, but requires IRS reporting. |
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| money that is working for you, either tax-deferred or tax-free within a retirement plan. |
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