Types of Investments
A security representing a fractional ownership stake in a corporation, giving the shareholder a claim on the company's assets and earnings.
What is stock?
This money can be used for financial emergencies, achieving goals like a down payment on a home, and long-term goals like retirement.
What is a savings account>
A personal, tax-advantaged investment account designed to help you save for retirement. IRAs offer various investment options, such as stocks, bonds, and mutual funds, with advantages that help your savings grow faster than in non-retirement accounts.
What is an IRA?
A U.S. government program providing financial benefits to eligible retirees, people with disabilities, and survivors of deceased workers. Benefits are funded through payroll taxes, and eligibility requires earning credits by working.
What is Social Security?
A quick formula to estimate the number of years it will take for an investment to double in value. To use it, you simply divide 72 by the annual interest rate of your investment.
Rule of 72
A type of loan that a government, agency, or company issues to borrow money from investors, acting as an IOU. In return for lending money, bondholders receive periodic interest payments
What are bonds?
Committing money or resources into an asset, like stocks, bonds, or real estate, with the expectation of generating income or profit over time.
What is investing?
An employer-sponsored retirement savings plan that allows employees to contribute a portion of their salary for their future.
What is a 401K?
This is the amount (percentage) that is taken out of your gross income
What is 6.2%?
This means you're earning interest on your principal and the previously earned interest. This is why it's often called "interest on interest".
What is compound interest?
Investment vehicles that pool money from many investors to buy a diversified portfolio of stocks, bonds, or other assets, managed by a professional.
What are mutual funds?
Mutual funds or ETFs designed for retirement saving that automatically adjust their mix of investments (like stocks and bonds) to become more conservative as a predetermined target date approaches.
What are target date funds?
An employer-sponsored retirement savings plan, often called a "tax-sheltered annuity plan," available to employees of public schools, or other non-profit organizations.
What is a 403B?
A U.S. federal payroll tax deducted from an employee's paycheck. It funds two key government programs: Social Security and Medicare. The total cost split evenly between the employer and the employee.
What is FICA Tax?
It is the largest stock exchange in the world by market capitalization, exceeding $25 trillion in July 2024.
What is the New York Stock Exchange.
These are items that are desirable, often have monetary or cultural value, and are collected by people as a hobby, for display, or as an investment
What are collectibles?
A legal document that specifies your wishes for distributing your assets, designating guardians for minor children or pets, and appointing an executor to carry out your instructions after your death.
What is a will?
A type of retirement account that allows you to contribute with after-tax dollars, meaning your money grows tax-free, and qualified withdrawals in retirement are also tax-free.
What is a Roth IRA?
A nine-digit number issued by the U.S. government to U.S. citizens, permanent residents, and eligible temporary workers, primarily to track lifetime earnings for calculating Social Security benefits.
What is a social security number?
The fundamental principle is that higher risk investments require the potential for higher returns to compensate investors for the uncertainty involved.
What is a risk vs return concept?
People can buy, sell, or rent this, and it can also be a form of investment offering benefits like cash flow and equity building
What is real estate?
This is when a company goes "public" and decides to sell shares for the first time.
What is an Initial Public Offering (IPO)?
A government program providing financial benefits to eligible retirees, people with disabilities, and survivors of deceased workers. Benefits are funded through payroll taxes, and eligibility requires earning credits by working.
What is Social Security?
An independent federal agency responsible for managing Social Security retirement, disability, and survivor benefits
What is the Social Security Administration (SSA)?
An employer-sponsored retirement plan that receives favorable tax treatment because it meets the requirements of the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act (ERISA).
What is a "qualified retirement plan?