click below
click below
Normal Size Small Size show me how
Savings and Invest
Savings and Investment
Term | Definition |
---|---|
Savings account . | A safe, low-return investment available from banks. There is generally no minimum deposit for this type of account, making it perfect for kids and teens just starting out |
Money market account | A type of savings account that offers higher interest rates, with higher minimum deposit levels than a regular savings account. The APY is usually higher than a savings account but lower than a certificate of deposit. |
Certificate of deposit | A savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return (APY is usually higher than savings or money market accounts) |
Annual percentage yield (APY) | The percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365 day period. |
Compounding | Compounding is where interest is earned on the principal (the original investment) and previously earned interest. |
Liquidity | How quickly and easily an asset can be converted into cash. |
Risk | Chance that an investment will lose value. You cannot be certain about the profits. |
Diversification | Buying several different investment alternatives to lower the risk of investing. |
Dividends | A share of corporate earnings paid to stockholders, determined by a corporation's board of directors. |
Stock | Represents a unit or share of ownership in a corporation, which shows that the holder is an "owner" of the corporation.(equity instrument) |
Capital gain | the profit from selling an asset such as a stock. It is the difference between the sale price and the purchase (buy) price. |
Capital loss | the loss from selling an asset such as a stock. The price of the stock decreased from the time it was purchased. |
Blue chip stock | the largest, strongest and most respected companies that have a long history of profits and stability. Generally pay dividends. |
Growth stock | usually newer companies that have the potential to make more money than blue chip stocks. More risky. |
Price per Earnings | current market value of a stock divided by total company profits |
Earnings per share | a corporation's net earnings divided by the number of outstanding shares. |
Securities (Stock) Exchange | the marketplace where stockbrokers can buy/sell stocks on behalf of investors. Examples are theJSE, NYSE and NASDAQ. |
NASDAQ | a stock exchange where many newer, technonogy stocks are bought and sold. |
Brokerage Firm | the company that helps an investor buy and sell securities. |
Stockbroker | a person that helps transfer stocks and bonds between buyers & sellers. |
Securities & Exchange Commission (SEC) | regulates and enforces laws concerning trading of stocks and bonds. |
Insider trading | A person that unfairly benefits from information not provided to the general public. |
Investment portfolio | a group of stocks and/or debt securities in different corporations held for investment purposes. |
Mutual fund | a pool of investments that are selected by a professional fund manager that an investor can buy into. This is an alternative to buying a specific stock or bond. |
Rule of 72 | estimate the amount of time it will take to double your money by dividing 72/interest rate. ex: if you are earning 4% interest, 72/4 = 18 years to double the money. |
Real Estate | an investment that is not liquid but you hope the value of the property will increase or you plan on renting it to someone else. |
Bond | a written promise to pay a debt by a certain date |
junk bond | a high risk, high interest paying bond that have a high risk of default. |
Government bond | government's written pledge to repay a specified amount of money, along with interest to the investor. This is a loan to a government debt instrument). |
maturity date | the date when a bond or investment will be repaid. |
face value | dollar amount of a bond which will be repaid at the maturity date. |
Dow Jones Industrial Average | The average cost of 30 selected stocks, used to give an indication of the direction (up or down) of the stock market over time. |