Lesson 1
the process of setting money aside to increase wealth over time for long-term financial goals, such as retirement
investing
a financial market that trades shares of ownership of public companies
the stock market
a qualified retirement savings plan offered by a company to its employees who contribute money from their gross pay
401(k)
the practice of dividing the money a person invests among different types of investments in order to lower risk
diversification
the process of figuring out how much money you’ll need in retirement and creating a plan to get there
retirement planning
the measurement of gain or loss generated on an investment relative to the amount of money invested
return on investment (ROI)
when prices in a financial market are on the rise or expected to rise
bull market
a list of your investments
portfolio
These funds invest in companies from around the world.
International stock mutual fund
a legal document listing how a person wants their assets distributed after their death
will
relationship of expected return (profit you expect to make) compared to the amount of risk (amount you stand to lose if the price goes down) taken with a given investment
risk-return ratio
a security that represents part ownership or equity in a company
stock
a tax-advantaged investing account that people use to save for retirement (traditional or roth)
individual retirement arrangement (IRA)
the total dollar market value of a company or how much a company is worth
capitalization
preparation of tasks to manage an individual’s assets after death
estate planning
can easily be sold and turned into cash
liquid assets
when prices in a financial market experience a prolonged decline
bear market
when you invest in a ____________________ you‘re contributing to a pool of money that will be invested in a mix of stocks, bonds, money market accounts, etc.
mutual fund
These funds are made up of large, well-established companies.
Growth and income stock mutual funds (large-cap)
for anyone born after 1960, full retirement age is ______________.
67
The Fifth Foundation is to....
build wealth and give
______________ are sold by companies and governments. When you buy one, you’re basically lending your money to the issuer for a certain period of time
bonds
if you take money out of your IRA before you‘re __________________, you‘ll have to pay a penalty.
59 1/2
These funds aim to provide maximum long-term growth from stocks of primarily smaller companies.
High risk = high return
Aggressive growth stock mutual funds (small-cap)
Social Security benefits are only meant to replace about _____________________ of your income from when you were working.
40%