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Personal Finance > Chapter 8- Investing and Retirement > Flashcards

Chapter 8- Investing and Retirement Flashcards

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1
Q

The process of setting money aside to increase wealth over time for long-term financial goals such as retirement.

A

Investing

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2
Q

Account or arrangement in which a person puts his/her money for long-term growth; invested money should not be used for a suggested minimum of 5 years

A

Investment

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3
Q

Quality of an asset that allows it to be converted quickly into cash without loss of value: availability of money

A

Liquidity

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4
Q

A list of your investments

A

Portfolio

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5
Q

Degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit

A

Risk

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6
Q

Relationship of substantial reward compared to the amount of risk taken

A

Risk-Return Ratio

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7
Q

Piece of ownership in a company, mutual fund, or other investment

A

Share

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8
Q

Securities that represent part ownership or equity in a corporation

A

Stocks

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9
Q

Money that is invested, either deferred or tax-free, within a retirement

A

Tax-Favored Dollars

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10
Q

A market in which short-term financial instruments such as Certificates of Deposit, Treasury bills, and bank deposits are traded

A

Money Markets

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11
Q

Money Markets have (high, low) risk

A

low

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12
Q

Buying a small piece of a company. Your return comes as the company increases in value.

A

Single Stocks

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13
Q

Single stocks are (high, low) risk

A

High

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14
Q

A debt instrument by which the company owes you money. Your return is the fluctuation in price and interest rate paid

A

Bonds

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15
Q

Bonds are typically (high, low) risk

A

low

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16
Q

An investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and similar assets

A

Mutual Fund

17
Q

Mutual funds are good (long-term, short-term) investments

A

long term

18
Q

Mutual funds are _____ risk

A

low to moderate, depending on diversification

19
Q

A qualified plan where everyone with an earned income is eligible for special tax treatment

A

Individual Retirement Arrangement (IRA)

20
Q

Funded with after-tax money, which allows your money to grow tax-free.

A

Roth IRA

21
Q

A savings account sold by an insurance company, designed to provide payments to the holder at specific intervals, usually after retirement

A

Annuity

22
Q

Fixed annuities have a (high, low) interest rate

A

low.

23
Q

Mutual funds sheltered by the annuity, which allows the mutual fund to grow tax-deferred

A

Variable Annuities

24
Q

Real estate has a VERY ____ liquidity

A

low

25
Q

Real estate is a (high, low) risk with a (high, low) return

A

High, High

26
Q

Gold is a (good, bad) investment because….

A

bad, it’s rate of returns is about equal to inflation

27
Q

Agricultural or mining products

A

Commodities

28
Q

The buying and selling of stock purchases each day through speculation

A

Day Trading

29
Q

When someone with a terminal disease sells their life insurance policy at less than fave value

A

Viaticals

30
Q

The trading of securities

A

The stock market

31
Q

Largest organized stock exchange in the US.

A

New York Stock Exchange

32
Q

Bull market

A

Upward trends

33
Q

Bear market

A

Downward Trends

34
Q

When a self-employed person may deduct up to 15% of their net profit on the business by investing in this

A

Simplified Employee Pension Plan (SEP)

35
Q

A retirement savings plan offered by a corporation to it’s employees. This account grows tax-deferred and may be matched by the company

A

401(k)

36
Q

Found in non-profit organizations.

A

403(b)

37
Q

Deferred Compensation. Available for gov’t employees

A

457

38
Q

Like a CD in your 401(k). do not use because of low return

A

Guaranteed Investment Contract (GIC)

39
Q

The practice of dividing the money a person invests between several different types of investments in order to lower risk

A

Diversification

Personal Finance (8 decks)

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