Stock Talk
This word describes a single unit of ownership in a company.
What is a share?
Stocks are generally riskier than these fixed-income investments that pay regular interest.
What are bonds?
This animal represents a rising, optimistic market — picture it thrusting its horns upward.
What is a bull?
This employer-sponsored retirement plan is named after a section of the U.S. tax code.
What is a 401(k)?
If you buy a stock at $50 and sell it at $70, the $20 profit is called this type of gain.
What is a capital gain?
When a company pays out a portion of its profits to shareholders, it usually does so quarterly; it's called this.
What is a dividend?
Spreading your money across different stocks, industries, and asset types to reduce risk is called this.
What is diversification?
When the market is falling and pessimism reigns, it's named after this animal that swipes its paws downward.
What is a bear?
Free money alert! Many employers offer this, contributing extra to your 401(k) based on what you put in.
What is an employer match?
Buy low, sell... this.
What is high?
When a company divides its existing shares into multiple shares to lower the price per share, it's called this?
What is a stock split?
This term describes how much a stock's price swings up and down — the bigger the swings, the higher it is.
What is volatility?
A bear market is officially declared when the market drops this percentage from its recent high.
What is 20%?
IRA stands for this.
What is an Individual Retirement Account?
This is the percentage you earn on an investment each year — the S&P 500 has historically averaged about 10% of it
What is annual return?
What is an IPO (initial public offering)?
Generally, the higher the potential return of an investment, the higher this is too — a fundamental tradeoff in investing
What is risk?
A market drop of 10% from a recent high — smaller than a bear market — is called this, a word that sounds like fixing a mistake.
What is a correction?
With this type of IRA, you pay taxes on money now so withdrawals in retirement are tax-free.
What is a Roth IRA?
Earning interest on your interest is called this powerful effect — Einstein allegedly called it the eighth wonder of the world.
What is compound interest (compounding)?
This ratio, calculated by dividing a stock's price by its earnings per share, helps investors judge whether a stock is over or undervalued.
What is the P/E ratio (price-to-earnings ratio)?
This strategy of investing a fixed amount at regular intervals, regardless of price, helps smooth out the risk of buying at the wrong time.
What is dollar-cost averaging?
This October 1929 event, nicknamed for a specific day of the week, kicked off the most famous bear market in history.
What is Black Tuesday (the Crash of 1929)?
This popular rule of thumb says you can safely withdraw this percentage of your portfolio each year in retirement.
What is the 4% rule?
Your return after subtracting inflation is called this kind of return.
What is real return?