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Savings and Invest

Savings and Investment

TermDefinition
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.
Created by: rudolph.beukes