front 1 Stocks | back 1 A long-term, growth-oriented investment representing ownership in a company; also known as 'equity.' |
front 2 Mutual Fund | back 2 Fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities or money market securities. |
front 3 Index Fund | back 3 An investment that tracks the performance of many investments as a way of measuring the overall performance of a particular investment type or category. |
front 4 Exchange Traded Fund (ETF) | back 4 <span>Very similar to mutual funds, except that they trade throughout the day on stock exchanges as if they were stocks. This means you can actually pay more or less than the value of the underlying holdings in the fund.<br><br></span> |
front 5 REITs | back 5 Some investors prefer to buy real estate through real estate investment trusts, which trade as if they were stocks and have special tax treatment |
front 6 Bond | back 6 Acts like a loan or an IOU that is issued by a corporation, municipality or the U.S. government. The issuer promises to repay the full amount of the loan on a specific date and pay a specified rate of return for the use of the money to the investor at specific time intervals. |
front 7 Money Market Mutual Fund | back 7 . A short-term investment that seeks to protect principal and generate income by investing in Treasury bills, CDs with maturities less than one year and other conservative investments. |
front 8 CD (Certificate of Deposit) | back 8 Is an account that allows you to save money typically at a fixed interest rate for a fixed amount of time—say, 6 months, 1 year or 5 years |
front 9 Commodity Funds | back 9 Invest in raw materials or primary agricultural products. These funds invest in precious metals, such as gold and silver, energy resources, such as oil and natural gas, and agricultural goods, such as wheat. |
front 10 Cryptocurrency | back 10 A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. |
front 11 Do all stocks pay dividends to investors? | back 11 No |
front 12 Which feature do Exchange-Trade Funds (ETFs) have in common with mutual funds? | back 12 One investment purchases a group of assets |
front 13 Why is it important to start investing as soon as possible? | back 13 You have more time for your money to compound |
front 14 Putting regular amounts of money into an investment account at specific time intervals is | back 14 Dollar cost averaging |
front 15 What is the S&P 500? | back 15 An index that tracks the stocks of 500 large U.S. companies |
front 16 Brokerage Account | back 16 An account is an arrangement in which an investor deposits money with a licensed brokerage firm, which places trades on behalf of the customer. |
front 17 Retirement Account | back 17 A plan for setting aside money to be spent after you complete working. |
front 18 IRA (Individual Retirement account) | back 18 Is an investment account for retirement savings. Which income taxes on certain deposits and on all gains are deferred until withdrawals are made after 59½. |
front 19 Roth IRA (Individual Retirement account) | back 19 An investment account for retirement savings allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax-free. |
front 20 401k | back 20 A qualified retirement plan, which means it is eligible for special tax benefits (Pre-tax, Post-tax, Roth, Annuity) You can invest a portion of your salary, up to an annual limit ($20,500) |
front 21 403b | back 21 Are retirement savings plans that serve employees of public schools and tax-exempt organizations. Contributions are made through payroll deductions. The IRS limits the amount that employees can contribute. |
front 22 Annuity | back 22 Is a long-term agreement (contract) between you and an insurance company that allows you accumulate funds on a tax-deferred basis for later payout in the form of a guaranteed income that you cannot outlive |
front 23 Educational (529) | back 23 A plan that is a tax-advantaged account that can be used to pay for qualified education costs, including college, K-12, and apprenticeship programs. |
front 24 Health Savings Account (HSA) | back 24 A tax-advantaged account created for or by individuals covered under high-deductible health plans (HDHPs) to save for qualified medical expenses. |
front 25 Custodial Account | back 25 A financial account (such as a bank account, a trust fund, or a brokerage account) set up for the benefit of a beneficiary, and administered by a responsible person, known as a legal guardian or custodian, who has a fiduciary obligation to the beneficiary |
front 26 Traditional IRA | back 26 Your money remains tax-deferred in this account until you withdraw (taxed as income) |
front 27 You want to "beat the market" with your ROI | back 27 Which is NOT a good reason to buy a stock fund like the S&P 500? |
front 28 How long do you have to hold a stock for it to be considered a long-term investment for tax purposes? | back 28 one year |
front 29 What is a dividend? | back 29 Money paid by a company to its shareholders |
front 30 Expense Ratio | back 30 The ratio between a mutual fund's operating expenses for the year and the average value of its net assets. |
front 31 Index Fund | back 31 Is a mutual fund, sometimes trading as an ETF, that allows an individual to "invest" in group of companies such as the S&P 500. |
front 32 Inflation | back 32 A rise in the prices of goods and services, often equated with loss of purchasing power. |
front 33 Management fee | back 33 The amount paid by a mutual fund to the investment advisor for its services. |
front 34 Volatility | back 34 The amount and frequency with which an investment fluctuates in value. |
front 35 What is the Dow Jones? | back 35 An index tracking the stocks of 30 large U.S. companies |
front 36 Which of the four investments has shown the highest returns historically? | back 36 stocks |
front 37 Novice investors should focus on timing the market to maximize their investments. | back 37 false |
front 38 When you purchase a stock, that means you’re a partial owner of the company. | back 38 true |
front 39 Asset Allocation | back 39 An approach to managing capital that involves setting parameters for different classes such as equities (e.g., ownership or stocks), fixed-income (e.g., bonds), real estate, cash, or commodities (e.g., gold or silver) |
front 40 Risk Tolerance | back 40 The degree to which you can tolerate volatility in your investment values |
front 41 Diversification | back 41 The process of owning different investments that tend to perform well at different times in order to reduce the effects of volatility in a portfolio, and also increase the potential for increasing returns. |
front 42 dividend | back 42 A portion of a company's profit paid to common and preferred shareholders. |
front 43 Short-term Investment | back 43 Asset purchased with an investment life of less than a year. Taxed at your personal tax rate. |
front 44 Long term investment strategy | back 44 A strategy that looks past the day-to-day fluctuations of the stock and bond markets and responds to fundamental changes in the financial markets or the economy. |
front 45 Market Timing | back 45 A risky investment strategy that calls for buying and selling securities in anticipation of market conditions. |