Savings vs. Investing
This type of financial activity is typically used for short-term goals and prioritizes safety and easy access over high growth.
Saving
Buying a share in a company gives you partial _________ of that company.
Ownership (equity)
This workplace-based retirement plan often allows employees to contribute part of their paycheck before taxes.
401(k)
This term describes how comfortable someone is with having their investments lose value.
Risk tolerance
This term describes the process of earning interest on both your original deposit and the interest it has already earned.
Compound interest
Loaning money to a company or government in exchange for interest payments describes this investment.
Bond
This retirement account is opened by an individual, not an employer.
IRA
Tracking the performance of a major market list like the S&P 500 is the goal of this type of fund.
Index fund
When someone chooses a savings account instead of purchasing real estate, they are usually prioritizing this key factor.
Liquidity
Investments that come with a higher potential return usually come with greater _______.
Risk
This type of IRA allows people to reduce their taxable income in the year they contribute.
Traditional IRA
These mental shortcuts can lead people to hold losing stocks or make emotional decisions instead of rational ones.
Cognitive biases
This phrase describes the basic strategy of making money on the stock market (or really with any asset).
Buy low, sell high
Putting your money in many different investments to reduce the possibility of major loss is known as this.
Diversification
This term describes when an employer contributes additional money to your 401(k).
When should you be more comfortable making riskier investments?
Earlier in working career
This type of account is used to buy and sell stocks, bonds, and funds, unlike a savings account, which mainly stores money.
Brokerage account
A collection of investments chosen and managed by professionals is referred to as this type of fund.
Mutual Fund
Provide two reasons why you should/cannot put all your money into a retirement account?
(1) Lack of liquidity - fees when you take money out early
(2) There are contribution limits
Name at least 2 factors you should consider when making investment decisions.
Risk tolerance, age, potential return, liquidity