Money Level I
Reinvesting earned interest back into the principal to allow money to grow exponentially over time
What is Compound Intrest?
The practice of investing in a large variety of stocks, bonds, and/or funds as a way to reduce your overall risk
What is Diversification
An investing tool for individuals to earmark funds specifically for their retirement
Individual Retirement Account (IRA)
Lisa lent her friend $800 at a 5% interest rate. What is the interest her friend needs to pay?
What is $40?
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs
What is a Portfolio?
A collection of stocks and/or bonds combined into one fund, which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor
What is a Mutual Fund ?
The rate of return that accounts for inflation and taxes
What is Real Rate of Return?
An individual retirement account that allows a person to set aside pre-tax income up to a specified amount each year
Traditional IRA
You owe 19% on a $10,000 credit card bill monthly. What was the principal that you owe?
What is $10,000?
The illegal act of trading a company's stock using information that is not available to the public
What is Insider Trading?
Also known as the Martha Stewart or Nacy P.
The process of setting money aside to increase wealth over time for long-term financial goals such as retirement
What is investing?
The annual interest payment on a bond is usually expressed as a percentage of its face value.
What is Coupon?
A retirement account, offered in some job sectors or companies that an employer maintains to give an employee a fixed payout at retirement
Pension
If you borrow $1,200 from a friend and they agree to a 9% interest rate on the money, how much interest did you earn?
What is $108?
A financial asset, such as a stock or a bond that can be bought and sold in a financial market
What is Security?
A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company
What is a STOCK?
The rate at which the price of goods increases and consumer purchasing power decreases over time
What is Inflation?
A retirement savings plan, sponsored through your employer who will often match your contributions, allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn
Traditional 401(k) Plan
If you borrow $98 from a friend and they agree to a 19% interest rate on the money, how much interest did you earn?
What is $18.62?
The rate of return that does not account for inflation or taxes
What is a Nominal Rate of Return?
A tax levied on profit from the sale of property or an investment.
What is Capital Gains Tax ?
A low-fee portfolio of stocks chosen to track or mimic a stock market index, thereby removing the human element of investing because no one is selecting the individual stocks
What is Index?
An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year
Roth IRA
If you borrow $1,500 from a friend and they agree to a 21% interest rate on the money, how much would they pay you back in total?
What is $1,815.00?
The government typically uses the loan to pay for public works to benefit its citizens.
What is a Municipal Bond?