2. Investment and savings planning. Flashcards
Inducement
a thing that persuades or influences someone to do something.
“companies were prepared to build only in return for massive inducements.”
Convenience
This is a sense of the relative ease with which a financial instrument or institution can be accessed in terms of time and location.
Liquidity
This is a measure of how quickly a financial instrument can be converted to cash.
Reward
The benefit or return gained from an investment.
Risk
The chance of losing money💸
Money Market Account (MMA)
An interest-bearing account similar to a checking account. Deposits may be added anytime; some of this type of accounts limit the withdrawal depositors may make without penalty
Real Estate
Property such as land, houses and office buildings.
Stocks
An ownership share or shares of ownership in a corporation.
Bonds
A certificate of indebtedness issued by a government or a publicly held corporation, promising to repay borrowed money to the lender a fixed rate of interest and at a specified time. (Government bonds are safer than corporate bonds).
Treasury securities
Bonds issued by the United States Treasury to investors when the federal government borrows money.
T-bills
T-notes
T-bonds.
T-bills
treasury bills have maturity of 1 year or less.
T-notes
Treasury notes have maturity of 1 year to 10 years.
T-bonds
Treasury bonds have maturity of more than 10 years.
Mutual Funds
A pool of money used by a company to purchase a variety of stocks, bonds or money market instruments. Provides diversification and professional management for investors.
Diversification
Indicates building/creating an investment portfolio that includes securities from different asset classes. It spreads risks across various financial investments, reducing the impact that poor returns from anyone investment are likely to have an overall portfolio.
Savings
Money set aside for future use that is held in easily-accessed accounts, such as savings accounts and certificate of deposit (CD’s)
Gift
A voluntary present of money or some other valuable asset.
Inheritance
Money or the assets given to a party upon one’s death, also known as a bequest.
Market Gains
Proceeds from previous investments in the form of interest payments, dividends (regular distribution of profits) or capital gains (realized income from selling an investment at a higher price than was paid for it).
Finance Charge
The total cost of credit, including interest and transaction fees.
Interest Rate Risk
The chance that interest rates may change (upward) while the saver is “locked in” to a (lower) rate for a time deposit ( a CD, for example) or a bond. Also the chance that interest rates may change (downward) while a borrower is “locked in” (higher rate) on a loan.
Load
A fee charged for purchasing (front-end) or selling (back-end) shares of mutual fund. This fee are usually calculated as a percentage of the amount of the transaction. Some mutual funds are no-loads funds.
Social Security System
A federal system of old-age, survivors,’ disability and hospital care (Medicare) Insurance which requires employers to withhold (or transfer) wages from employees paychecks and deposit that money in designated accounts.
Federal Insurance Contributions Act (F.I.C.A.)
a U.S. law that mandates a payroll tax on the paychecks of employees, as well as contributions from employers, to fund the Social Security and Medicare programs. For self-employed persons, there is an equivalent law called the Self-Employed Contributions Act (SECA)
