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Savings & Investing
| Term | Definition |
|---|---|
| Savings | the portion of income set aside and not spent, typically held in low-risk accounts for future use, such as emergencies or short-term goals |
| Investment | the outlay of money usually for income or profit : capital outlay |
| Return on investment | a performance metric that measures the profitability of an investment by dividing its net profit by its cost |
| Compound Interest | interest computed on the sum of an original principal and accrued interest |
| Stock | the ownership element in a corporation usually divided into shares and represented by transferable certificates |
| Bond | a binding agreement |
| Diversification | the act or practice of spreading investments among a variety of securities or classes of securities |
| Retirement Account | a savings and investment account designed to hold money for future use in retirement |
| Stock Market | the market for stocks throughout a country |
| Dividend | an individual share of something distributed: such as a share of surplus allocated to a policyholder in a participating insurance policy |
| 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 | a debt instrument issued by a company to raise capital from investors |
| Government Bond | a debt security issued by a government to raise money, which is then loaned to the government for a set period |
| Beneficiary | a person or thing that receives help or an advantage from something : one that benefits from something |
| Executor | the person named in a will to legally settle an estate, which includes managing and distributing its assets, such as investments, according to the deceased's wishes |
| Trust | an investment trust, which is a publicly traded company that pools money to invest in a portfolio of assets, or a trust fund, which is a legal arrangement for estate planning where a trustee manages assets for beneficiaries |
| Estate | the collection of all assets and liabilities a person owns upon death (their "estate"), which is then distributed to beneficiaries |
| Will | a legal document that specifies how a person's assets, including investments like mutual funds, stocks, and bank deposits, should be distributed after their death |
| Power of Attorney | a legal instrument authorizing one to act as the attorney or agent of the grantor |
| Investment Liquidity | the ease and speed with which an asset can be bought or sold without significantly affecting its price |
| Probate | the legal process of administering a deceased person's estate to distribute their investment assets to beneficiaries |
| Personal Financial Planning | the process of managing your money to meet your short-term and long-term financial goals, such as buying a home, paying for college, or saving for retirement |
| Estate Planning | the arranging for the disposition and management of one's estate at death through the use of wills, trusts, insurance policies, and other devices |
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