personal finaace Flashcards
What are the three factors that influence saving money?
time, interest rate, and principle
liquidity
can quickly and easily be converted into cash
compound interest
earning interest on interest
opportunity cost
the value of the next best alternative that must be forgone as a result of a decision
trade off
giving up one thing for another
pay yourself first
a saving strategy that states to set aside a predetermined portion of money for saving each time a person is paid
most liquid savings tool
checking account
security level of savings tool
extremely safe
what account has a tiered interest rate
money market
what are the features of a CD
fixed period of time
what are the features of a money market account?
minimum balance tiered interest
What is inflation?
rising cost of goods
What is the relationship between risk and reuturn?
higher return, greater risk
What is a diversified portfolio?
wide area of investment
stock
a share of ownership in a company
current market price
price of a stock today
dividend
return on investment and stock
mutual funds
when a company combines the funds of many different investors and then invests that money in a diversified portfolio
bond
form of lending to a company or the government
rule of 72
formula used to calculate how long it will take for your investment to double