The Market
A market in which prices are falling, encouraging selling.
What is a Bear Market?
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?
A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals
What is Social 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 market in which there is increased stock trading and rising stock prices
What is a Bull Market?
A security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond's maturity date
What is a Bond?
An investing tool for individuals to earmark funds specifically for their retirement
What is an Individual Retirement Account (IRA)?
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
What is a Dividend?
Degree of uncertainty on how likely the investor is to make money on an investment
What is Risk?
The world's largest stock exchange, physically located in New York City
What is the New York Stock Exchange (NYSE)?
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 choosing the individual stocks
What is an Index Fund?
An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year
What is a Roth IRA?
A person, company, or institution that owns that least one share in a company
What is a Shareholder?
A long-term strategy for building wealth by buying investments - typically index funds - and holding them for many years to minimize trading and costs. Research shows that 85-95% of passively managed funds perform better than actively managed funds over the long run.
What is Passive Investing?
An index of 500 large cap companies chosen based on their size, industry, and other factors, used to represent the entire market
What is the S&P 500?
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?
A retirement account, offered in some job sectors or companies, that an employer maintains to give an employee a fixed payout at retirement
What is a Pension?
An asset or item that is acquired with the goal of making a profit
What is an Investment?
A financial asset, such as a stock or a bond, that can be bought and sold in a financial market
What is a Security?
The growth of an investment where earnings, such as dividends or interest, are reinvested to generate additional earnings over time
What is a Compound Return?
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds
What is a Portfolio?
A retirement savings plan, sponsored through your employer who will often match your contributions, that allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn
What is a 401K?
A market where shares in corporations are bought and sold through an organized system
What is a Stock Exchange?
Buying and selling investments - typically individual stocks and funds - within a short time frame (from seconds/minutes to days/weeks) in hopes of making quick profits from the small price changes. Research shows that 95% of active traders lose money.
What is Active Trading?