Ch. 3 and 8 Flashcards
Consequences of overdrawing your checking account
Bounced check fee from store, overdraft fee from bank
Purpose of budget
Make money go further
Percentage of Americans living paycheck to paycheck
70%
PYF
Pay Yourself First; setting aside money for saving/investing
Four types of expenses for in a budget
Variables, Fixed, Intermittent, Discretionary (Non-essential)
Intermittent expenses
Expenses that occur at various time throughout the year and tend to be large
Discretionary Expenses
Non Essentials
Check Register
your own record of all your transactions
Reasons why cash flow statements don’t work
Leave things out, over complicated, don’t write a budget, and/or don’t live on your budget
4 types of long-term mutual fund investments you should invest in to be properly diversified
Growth, growth and income, international, and aggressive growth
Things to never do when investing:
Never invest purely for tax savings, and never invest using borrowed money
What is a CD?
Certificate of deposit; savings account with a slightly higher interest rate because of a longer savings commitment
What is a money market account?
low-risk bank savings account with check-writing privileges (great for emergency fun because very liquid and stable
Dividend
Distribution of a portion of a company’s earnings
SEC
U.S. Securities and Exchange Commission; regulates the stock market
FDIC
Federal Deposit Insurance Corporation; insures deposits in commercial banks
Roth IRA
an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax-free.
Annuity
you make an investment in the annuity, and it then makes payments to you on a future date or series of dates.
401k
retirement
403b
retirement for tax-exempt organizations
What should a young investor interested in an above-average growth invest in?
Mutual funds
If you leave a company that had a retirement plan, what should you do with that money?
roll it over
Tax-favored dollars
You either pay taxes on it before, then get it or get it and pay taxes later
529 plan
Tax-advantaged savings plan designed to encourage saving for future college costs
Viaticals
Buying the beneficiary position on a life insurance policy if someone is dying
What type of investment has a 70-year track record of 4.1% return
Gold
Commodity
A raw material or primary agricultural product that can be bought and sold (Copper or coffee)
