Debt
The cost of borrowing money
What is interest?
A number that is used as a risk assessment tool for lenders and reflects the lendees ability to pay back debt
What is a credit score?
Setting aside money for future use, typically in a financial instrument that yields interest.
What is saving
Spending money with the goal of achieving a profit
What is investing?
An example of "good" or reasonable debt
Mortgage, car loan, business loan
When you use debt to purchase something that can physically be taken away from you if you cannot service the loan payments (ex. house, car, equipment)
The most important element of your credit score.
What is your payment history?
Saving money for a vacation you plan to take in 1 year is considered this type of savings goal
Markets in which individual pieces of ownership in a company are sold
What is the stock market?
A traditional retirement investment account- typically through your employer
Debt that has a physical asset which can be returned to the lender or taken away from you if you cannot afford the payments
Debt payments should be no more than this percentage of your total income.
What is 15%
These savings accounts yield up to a 5% interest rate while maintaining most of the accessibility advantages of a traditional savings account. Most are online accounts.
What are high-yield savings accounts?
- supply and demand
- company performance
- news/current events
- investor expectations and behavior
These are common mistakes people make when investing in the stock market (list at least 3)
What are trying to "get rich quick", investing based on social media or internet hype, putting all your money into one company's stock, selling when prices drop
A credit card is an example of this type of debt
What is revolving debt?
This type of savings account functions like a combination of a checking and savings account, with access to funds through a debit card while funds in the account yield a low interest
Money Market Account
This type of investment allows people to buy portions of shares of many different companies, allowing for increased diversification and less risk
The three rules to follow for success in investing in the stock market
What are: buy and hold, dollar-cost averaging, avoiding emotional decision-making
A system for paying off installment loans in which the initial payments mostly service the interest and later payment contribute more toward debt- usually allowing for opportunities for paying less over the life of the loan.
These 5 elements make up your credit score
1. Payment history
2. Amount owed
3. Length of history
4. New credit
5. Credit mix
Interest on your deposits + interest earned
Companies pay shareholders a portion of the business' profits
What are dividends?
This principle states that when it comes to investing and saving, patience and consistency over long periods of time are the key to building wealth
What is the time-value of money