Schwab 1 Flashcards
Roth IRA
A Roth IRA is a retirement savings account that allows your money to grow tax-free. You fund a Roth with after-tax dollars, meaning you’ve already paid taxes on the money you put into it. In return for no up-front tax break, your money grows and grows tax free, and when you withdraw at retirement, you pay no taxes. That’s right - every penny goes straight in your pocket.
ETFs
Exchange-traded funds (ETFs) offer investors the ability to diversify over an entire sector or market segment in a single investment. Find out how they are created and what they can do for your portfolio.
IRA
An Individual Retirement Account (IRA) is a type of savings account that is designed to help you save for retirement and offers many tax advantages. There are two different types of IRAs: Traditional and Roth IRAs.
Traditional IRA
A traditional IRA is a tax-deferred retirement savings account. You pay taxes on your money only when you make withdrawals in retirement. Deferring taxes means all of your dividends, interest payments and capital gains can compound each year without being hindered by taxes - allowing an IRA to grow much faster than a taxable account.
401 K
is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.
Mutual fund
A mutual fund is at its core a managed portfolio of stocks and/or bonds. You can think of a mutual fund as a company that brings together a large group of people and invests their money on their behalf in this portfolio. Each investor owns shares of the mutual fund, which represent a portion of its holdings.
Investing in a share of a mutual fund is different from investing in shares of stock. Unlike stock, mutual fund shares do not give its holders any voting rights. A share of a mutual fund represents investments in many different stocks (or other securities) instead of just one holding.
dividends
dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.
“they are interesting in that…if you’ve held a stock for over 6 months and it’s an american company that’s not a reit, you get what are called qualified dividends.
stock
a share of the ownership of the country
board of directors
is a group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues.
assets
ex. building, the pie pans, and the bankking materials. + 10% of any future earnings.
index
Passively managed funds, such as index funds, are attractive because of their low fees. They don’t require active management—they simply track the indices they represent—so their costs are among the lowest in the mutual fund world. Passively managed funds also tend to be more tax efficient.
An index is a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market.
major exchanges
A stock exchange does not own shares. Instead, it acts as a market where stock buyers connect with stock sellers. Stocks can be traded on one or more of several possible exchanges such as the New York Stock Exchange (NYSE).
The Nasdaq, an electronic exchange, is sometimes called “screen-based” because buyers and sellers are connected only by computers over a telecommunications network.
market value
The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization of a publicly-traded company, and is obtained by multiplying the number of its outstanding shares by the current share price.
ex.
small cap
denoting or relating to the stock of a company with a small capitalization.
large cap
denoting or relating to the stock of a company with a large capitalization.
