Stocks
Diversifying our portfolio is often expressed by the saying:
"Don't put all your eggs into one basket"
When should you start investing for retirement?
When you start earning income
This is the term for the initial amount of money deposited or borrowed before interest is applied.
principal
What is the highest yielding savings account?
MMA, CD, Savings
MMAs (Money Market Accounts)
Buying shares of a company makes you a partial owner of that company. These shares are commonly called this
stocks
When the stock market is very successful, it is often called a ___ market.
bull
traditional IRA differs from a Roth IRA in that withdrawals from a traditional IRA are taxed, while this type of IRA allows tax-free withdrawals
roth IRA
This type of interest is calculated only on the initial principal, not on accumulated interest
simple interest
When is it most beneficial for a person to buy a home?
when there are low interest rates
investment type that represents a loan to a company or government in exchange for periodic interest payments and the return of principal at maturity
bond
How do you first start investing in the stock market?
notify a bank, then create a brokerage account, then start investing
What’s a 401(k)?
A 401(k) is a tax-deferred investment and savings plan that acts as a personal pension fund for employees.
The formula for compound interest is
A = P(1 + r/n)^(nt).
In this formula, "n" represents this value
number of times compounded per year
recommended percentage of income financial experts suggest saving from each paycheck
20%
term for spreading investments across different asset classes to reduce risk
diversification (diversifying a portfolio)
What does the ticker symbol VFAIX stand for?
Vanguard Financials Index Fund
This government program provides retirement benefits to eligible workers based on their earnings history and the number of years worked
social security
if you deposit $1,000 in a savings account earning 5% interest, compounded yearly, how much will you have after 2 years (use a calc (slang for calculator))
$1,102.50
type of high-yield account, often offered by online banks, provides higher interest rates than traditional savings accounts
high-yield savings account
The Dow Jones Industrial Average and S&P 500 are examples of this type of financial measure that tracks stock performance
stock market index
Where is the oldest stock market located?
Amsterdam Stock Exchange (AEX)
When you deposit money into a 401(k), how much does your employer match?
generally 50%
This financial rule of thumb estimates how long it will take for an investment to double based on its interest rate
rule of 72
FDIC insures bank deposits up to this amount per depositor, per insured bank, for each account category
$250,000
high-risk, high-reward investment strategy involves borrowing money to increase the potential return of an investment
leveraging