Personal Finance Flashcards
Why do people need to have personal savings in a bank?
You can take out money at any time
Purpose of a mutual fund
Automatic investing & security
What Does it mean to have a portfolio that is diversified?
Investing in many different stocks
Why are municipal bonds attractive to investors
Generally exempt from federal income tax
Difference between a stockholder and a bond holder
Stockholders = ownership of stock
Bond = creditor of stock
What is NY stock exchange
Largest stock exchange
What is Dow Jones industrial average
1 indicator of stock market health
Liquid savings
Turns investment into cash/bonds
Who is most risky vs less
Over 60= less risky
Early - mid 20= more risky
Rule of 72
72 divided by interest rate
5 components of credit score
Payment, history, debt amounts, length of credit, history, new credit inquiries, Credit mix
Revolving vs installment credit card
Revolving = always open
Installment = set payments for set # of years
What is good and bad FICO
FICO = credit score
Good = 720 above
Bad =619 below
How does bad credit affect you
High interest
Pay yourself first
Put money in savings 1st
