Financial Terms
This term means something that a person or a group owns that is valuable or useful. It could be anything like money, property, or even a special skill.
What is an asset?
This is when you put your money into something, like stocks or real estate, with the hope that it will grow in value over time.
What is an investment?
This is a list of 500 of the biggest companies in the U.S., often used to track how the overall stock market is doing.
What is the S&P 500?
This employer-sponsored retirement plan lets employees put money in, before taxes are taken out of your paycheck. It’s a great way to save for retirement
What is a traditional 401(k) plan?
This is the money you make (or lose) from an investment after you put in your money.
What is a return?
This is when the prices of things go up over time, making it harder to buy as much with the same amount of money. It means your money doesn't go as far as it used to.
What is inflation?
This term means the chance of losing some or all of the money you put into an investment.
What is risk?
This is one of the largest and most famous stock exchanges in the world, located in New York City, where people buy and sell stocks.
What is the New York Stock Exchange (NYSE)?
This is a type of plan where, after someone retires, they get a fixed amount of money every month, usually based on how long they worked and how much they earned.
You typically get a pension from your employer if they offer one, especially if you work for the government, a large company, or an organization with a retirement plan.
What is a pension?
This is the money you owe to others, could be borrowed money or bills you have to pay. (Phone bill)
What are liabilities?
This is when you earn interest not just on the money you saved, but also on the interest you already earned.
What is compound interest?
This investment strategy involves spreading your money across different types of investments to help reduce risk.
What is diversification?
This is when a company sells its shares to the public for the first time to raise money.
What is an IPO (Initial Public Offering)?
This is an account you set up yourself to save money for when you get older, and you get special tax benefits to help your money grow.
What is an Individual Retirement Account (IRA)?
This word means the value of something you own, like a house or a company, after you subtract any money you owe.
What is equity?
This means how much stuff you can buy with a certain amount of money. If prices are lower, you can buy more things; if prices are higher, you can buy less.
What is purchasing power?
This is a type of loan that companies or governments sell to raise money. When you buy one, you're lending them money, and in return, they pay you interest regularly until they pay back the full amount.
What is a bond?
This is a group of stocks that shows how a certain part of the market is doing, like the S&P 500.
What is an index?
This type of individual retirement account lets you contribute money before taxes, but you’ll pay taxes on the money when you withdraw it later in life.
What is a Traditional IRA?
This U.S. government program provides financial assistance to retired people, disabled individuals, and families of deceased workers.
What is Social Security?
This is the amount of money you earn (or lose) from an investment, shown as a percentage of how much you put in.
What is the rate of return?
This is an account where you can buy and sell things like stocks and bonds. It's like a special "store" for investments, and it helps you manage your money in the stock market.
What is a brokerage account?
This is when someone uses secret, non-public information about a company to buy or sell its stocks for a profit.
What is insider trading?
This type of individual retirement account lets you put in money that has already been taxed, and when you take it out later, you don’t have to pay taxes on it.
What is a Roth IRA?
This is a way to invest where you and other people put your money together to buy a variety of stocks or bonds, and a manager helps decide where to invest it.
What is a mutual fund?