Investing Basics & Strategies
This financial strategy involves investing the same amount of money at regular intervals over time to minimize the impact of market ups and downs.
What is dollar-cost averaging?
When you purchase this, you own a small partial piece of a public corporation and may receive dividends.
What is a stock?
When you purchase this from a company or government, you are essentially lending them money which they promise to repay with interest by a certain date
What is a bond?
This type of fund is managed by a professional fund manager who charges a fee with the goal of outperforming the market.
What is an actively managed mutual fund?
For someone who prefers a hands-off approach, this digital tool uses algorithms to automatically build and manage a portfolio based on risk preferences.
What is a robo-advisor?
Unlike saving, which is meant for short-term goals, investing is designed for the long term (10+ years) with the primary goal of outperforming this economic force that decreases purchasing power
What is inflation?
This type of market occurs when more investors are buying stocks, causing overall stock values and prices to increase
What is a bull market?
This term refers to the regular interest payment made by a bond issuer to the bondholder.
What is a coupon?
This popular passive fund aims to mirror the performance of a specific market benchmark, like the S&P 500, by holding all or most of its securities.
What is an index fund?
This employer-sponsored retirement plan allows employees to contribute a portion of their salary on a pre-tax basis
What is a Traditional 401(k) plan?
This investment strategy spreads your money across a variety of assets (stocks, bonds, funds) to reduce portfolio risk so that a loss in one asset can be balanced by another.
What is diversification?
These are two primary ways an investor can make a profit from investing in an individual stock
What are receiving dividends and selling the stock at a higher price than you bought it for?
This is the key difference between holding an individual bond versus investing in a bond fund.
What is higher diversification?
This type of fund can be bought and sold on the stock market throughout the trading day just like an individual stock
What is an Exchange-Traded Fund (ETF)?
This government program pools contributions from current workers to provide retirement support benefits to those who are eligible.
What is Social Security?
This principle allows you to earn interest not only on the initial principal you invested, but also on the accumulated interest from previous periods.
What is compound return / compound interest?
This corporate action increases the number of shares outstanding while lowering the individual value of each share without changing the overall value of the company.
What is a stock split?
Riskier bonds issued by corporations that are more likely to default feature interest rates that tend to be set at the _____ end to attract investors.
What is higher?
This specific type of fund automatically adjusts its asset allocation and risk level to become more conservative as a specific retirement year approaches.
What is a Target Date Fund (TDF)?
When deciding between a Roth IRA and a Traditional IRA, an investor must primary ask themselves this fundamental tax question?
What is "Do I want to pay taxes now or later?"
When overall interest rates rise to 10%, the price of an existing bond you own with a lower 5% coupon rate will do this.
What is decrease?
This online portal or account type is required to buy and sell stocks, bonds, and mutual funds
What is a brokerage account?
When overall market interest rates fall below your bond's fixed rate, your existing bond becomes more valuable, causing its secondary market price to ________.
What is increase?
Between an active fund with a 7% return and a 1% fee versus a passive index fund with a 6.5% return and a 0.1% fee, this fund yields a better net return for the investor
What is the passive fund?
Financial experts strongly recommend starting to save and invest for retirement as early as this age range
What is your 20s?