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Anything of value or a resource that can be converted into cash. Examples include real estate, stocks, bonds, or savings accounts.
asset
The process where interest earned on an investment or loan is added to the principal, and future interest is calculated on the increased balance.
Compounding Interest:
A savings account offered by banks with a fixed interest rate and a specific maturity date, where the money is not accessible until the CD matures.
Certificate of Deposit (CD):
A portion of a company's earnings distributed to shareholders, typically in the form of cash or additional shares.
Dividends:
Investment funds that pool money from many investors to purchase securities like stocks, bonds, or other assets.
Mutual Funds:
The cost of borrowing money, typically expressed as a percentage. It’s the amount paid by a borrower to a lender for the use of their money.
Interest:
Specific financial objectives or targets an individual sets, such as saving for retirement, buying a home, or funding a child’s education.
Goals:
A type of bank account that allows for easy deposits and withdrawals, typically used for day-to-day expenses.
Checking Account:
The rate at which the general level of prices for goods and services rises, eroding purchasing power.
Inflation:
A type of mutual fund or ETF that aims to replicate the performance of a specific index, like the S&P 500.
Index Funds:
The loss of potential gain from other alternatives when one alternative is chosen. In finance, it refers to the trade-off between different investments or choices.
Opportunity Cost:
The percentage at which interest is charged or earned on an amount of money.
Interest Rate:
A type of savings account that offers a higher interest rate in exchange for higher minimum balance requirements.
Money Market Deposit Account:
Payment made by a tenant to a landlord for the use of property or land.
Rent:
Property consisting of land or buildings, often used as an investment or for residential, commercial, or industrial purposes.
Real Estate:
The balance between two conflicting choices, where gaining one thing requires giving up something else.
Trade-off:
An essential item or service that is necessary for basic survival or well-being, like food, shelter, and healthcare.
Need:
A deposit account held at a bank that earns interest over time, used for short-term saving.
Savings Account:
The possibility of losing money or failing to achieve an investment's expected return.
Risk:
Speculative Investments: Investments made with the hope of significant returns, often involving higher risk, such as cryptocurrency or certain stocks.
Speculative Investments:
The total value of all assets owned, including money, property, stocks, and other investments.
Wealth:
Non-essential items or services that improve quality of life, but are not necessary for survival, like luxury goods or entertainment.
Want:
A type of debt security where the issuer borrows funds from the investor and agrees to pay back the principal amount on a specified date with interest.
Bond:
Shares of ownership in a company. When you own stocks, you own a portion of that company.
Stocks:
how easily an asset can be converted into cash without losing value.
Liquid in finance