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Savings & Investing
| Term | Definition |
|---|---|
| Savings | the money one has saved, especially through a bank or investment plan. |
| Investment | the action or process of investing money for profit or material result. |
| return on investment | tells you how much money you've made (or lost) on an investment or project after accounting for its cost. |
| compound interest | interest computed on the sum of an original principal and accrued interest. |
| stock | money or capital invested or available for investment or trading. |
| bond | form of debt security, where an investor lends money to a borrower (like a government, company, or agency) for a specified period, in return for periodic interest payments. |
| diversification | the practice of spreading your investments around so that your exposure to any one type of asset is limited. |
| retirement account | specialized savings vehicles designed to help individuals accumulate funds for their future retirement. |
| stock market | a place where people can buy and sell shares of publicly traded companies. |
| dividend | the % of a company's earnings that is paid to its shareholders as their share of the profits. |
| mutual fund | an open-end investment company that invests money of its shareholders in a usually diversified group of securities of other corporations. |
| common stock | stock other than preferred stock. |
| preferred stock | stock guaranteed priority by a corporation's charter over common stock in the payment of dividends and usually in the distribution of assets. |
| corporate bond | type of debt security issued by a corporation to finance its operations or to raise capital. |
| government bond | a form of bond issued by a government to support public spending. |
| beneficiary | person, organization, or entity that is legally designated to receive benefits or proceeds from an account or policy upon the death of the account holder or policyholder. |
| executor | a person, bank or trust company named in a deceased person's will that is tasked with carrying out the wishes of the deceased and settling the estate. |
| trust | a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. |
| estate | the degree, quality, nature, and extent of one's interest in land or other property. |
| will | a legal document that coordinates the distribution of your assets after death and can appoint guardians for minor children. |
| power of attorney | a legal instrument authorizing one to act as the attorney or agent of the grantor. |
| investment liquidity | how easily or quickly a security can be bought or sold in a secondary market. |
| probate | legal process of proving the validity of a will and overseeing the distribution of a deceased person's assets to their heirs. |
| personal financial planning | the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. |
| estate planning | covers the transfer of property at death as well as a variety of other personal matters and may or may not involve tax planning. |
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