What is Investing?
The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
Investing
The underlying risk exposures that drive the return of an asset class.
Risk Factor
An interest-bearing security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals (known as a coupon), and to repay the principal amount of the loan at maturity.
Bond
A term used to describe the ownership certificates of any company.
Stock
An investment vehicle that consists of a ‘pool’ of funds contributed by many investors to invest in stocks, bonds, and other assets.
Mutual Fund
Employer puts money into a pool of funds that is invested on the employee’s behalf.
Pension Program
The grade given to a particular bond that indicates its credit quality.
Bond Rating
Bonds issued by corporations.
Corporate
______________ make money when the stock is worth more than they paid.
Shareholders
A conglomerate of different financial assets which balances risk and return.
Portfolios
Government program paid for by income tax and given to retirees/disabled.
Social Security Program
With no _____________, investors make money only through an increase in stock price.
Dividends
Bonds issued by agencies of the U.S. government or government-sponsored enterprises.
Agency
_________ __________ is a type of security that represents partial ownership in a company. It's also known as a voting share or ordinary share.
Common Stock
A risk management tool that mixes a large amount of investment mediums within a portfolio.
Diversification
Interest is calculated based on the initial principal and the accumulated interest of previous periods.
Compound Interest
Historically, stocks average 10-_______% returns.
12
Bonds issued by states, cities, counties, etc. to fund public projects.
Municipal
A different type of equity represents ownership of a company and the right to claim income from the company's operations. _____________ ________ have a higher claim on distributions (e.g., dividends) than common stockholders.
Preferred Stockholders
A c____________ __ ___________ is a savings account that pays a fixed interest rate for a set period. CD's are a low-risk investment option that can be a good way to earn interest on your money.
Certificate of Deposit (CD)
The FIRE movement argues for rapid wealth accumulation far in advance of the traditional retirement age to give you more options in life, earlier on. What does the acronym stand for?
Financial Independence, Retire Early
A financial product sold by financial institutions pay out a stream of payments to the individual at a later point; primarily used as a means of providing guaranteed cash flow for an individual during their retirement years.
Annuity
Issued by entities that have a low investment grade (they have a weaker ability to pay back the bond); generally results in a higher interest rate and higher yields.
High Yield Bonds
____________ __________ plans (DRIPs) and direct investment plans (DIPs) allow shareholders to purchase stock directly from the company.
Dividend Reinvestment
A term to describe an investment whose earnings are free from taxation until they are withdrawn by the investor; taxes on income that can be postponed.
Tax Deferred