CDs, Money Market Accounts, Regular Savings Accounts
FDIC insured saving and investing tools
Pay Yourself First
Setting aside money for savings and investing each pay period or month before any other spending.
Setting aside money for emergencies or short term goals such as a vacation.
Earning interest on interest
3-6 months of living expenses
The standard used to determine how much should be held in an emergency fund.
Buy & hold
Investment strategy of putting money into an investment and leaving it there for a long period of time to gain in value, earn interest or dividends.
Banks & Credit Unions
Where consumers can go to get both savings accounts and investment services in one location.
Investment that represents ownership in a corporation/company. Pays dividends (Income) and increases in market value (Capital Gains) to benefit the investor.
The investments of many investors are pooled in a fund that is diversified by its nature, professionally managed, and does not take a large investment to start and can be added to monthly.
Employer sponsored retirement plan that deducts contributions from the employee's pay before taxes are calculated, and may include at least a partial match of contributions by the employer.
As we move up the investment pyramid, the potential return on an investment increases, and so does the risk of the investment losing value.
Investing strategy that balances risk tolerance, investor's goals and current investment outlook to maximize profits for the investor.
How quickly easily assets can be accessed and converted into cash
Fluctuation in the value of an investment from one period of time to another.
An individual's collection of investments.
Amount of deposits covered by FDIC or NCUA depositor insurance.
Earnings and principal of an investment are not taxed until they are withdrawn.
Earnings from an investment are not taxed. Roth IRA earnings, and interest on a municipal bonds are 2 examples of tax exempt investment income.
Contract with an insurance company that guarantees future income for a certain number of years or life.
Tax deductible contributions and tax deferred earnings that can be withdrawn when the investor reaches age 59 1/2.
Securities and Exchange Commission (SEC)
Fed government agency that oversees the trade of stocks, bonds, mutual funds etc. and licenses brokers as well as regulating stock exchanges.
The possibility that an investment may lose value in the market.
Compounding & Time
Two factors that help investors grow wealth over a lifetime of saving and investing.
Rule of 72
Mathematical function that tells an investor how long it will take them to double their money, how often an investment will double between when investing starts and when it stops, and the interest rate needed to reach a goal. 72 divided by rate of return.
Price paid for using someone else's money
The original amount of money saved or invested
Setting aside money to make more money, build wealth and reach long term financial goals.
A plan similar to a 401K for a self-employed person that is approved by the IRS
A group of people working together for a common good
Related or unrelated individuals sharing resources (especially time and money) who also show concern about each other's well-being
The provision of a product or service in lieu of money
An organization that exists to benefit others through human service, conservation, religious, or other charitable causes
The access a person has to social relationships that can provide resources
People who pay taxes to federal, state, county or municipal (city/town) governments
The system of governance that provides structure, protection, and services to people residing in a nation, state, county, or municipal (city/town) governments
Time value of money
Money available at the present time (today) is worth more than the same amount if received in the future
The purchase of goods or services
Do it yourself
When you complete a task yourself rather than paying someone else
Cash set aside to cover the cost of unexpected events
Percentage rate used to calculate interest
Certificate of Deposit
An account at a depository institution that is used for a fixed period of time and allows restricted access to the funds deposited
An account that allows quick access to funds for transactions
Businesses that provide financial services
Money market deposit account
An account at a depository institution that usually has minimum balance requirements and tiered interest rates
Accounts offered by depository institutions whose main purpose is to help people manage their money
Tiered interest rate
The amount of interest earned depends on the account balance
A form of lending to a company or the government (city, state, or federal)
Facilitates the buying and selling of investments from a stock exchange
unearned income received from the sale of an asset above its purchase price
Discount brokerage firm
Only completes orders to buy and sell investments
The share of profits distributed in cash
A trained professional that helps people make investing decisions
Full-service brokerage firm
Offer investment transactions as well as investment advice and a financial advisor
A group of similar stocks and bonds
A mutual fund that was designed to reduce fees by investing in the stocks and bonds that make up an index
The rise in the general level of prices
The danger that money won't be worth as much in the future as it is today
Assets purchased with the goal of providing additional income from the asset itself but with the risk of loss
An individual's general approach to investment risk
The possibility that an investment will fail to pay the expected return or fail to pay a return at all
The current price that a buyer is willing to pay
The specified time in the future when the principal (or initial investment) amount of the bond is repaid to the bondholder
Created when a company combines the funds of many different and then invests that money in a diversified portfolio of investments
Reduces risk by spreading money among a wide array of investments
Rate of return
The total return on an investment expressed as a percentage of the amount of money saved
A fee charged for use of property or land
The profit or income generated by saving and investing
The chance of loss from an event that cannot be entirely controlled
Have the potential for significant fluctuations in return over a short period of time
Stockholder or Shareholder
The owner of stock
An organized, central service to buy and sell stocks, bonds and other investments that are traded
Reduce, defer, or adjust the current year tax liability