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Save & Invest Vocab
Savings and Investing Vocablary
| Term | Definition |
|---|---|
| savings | money put aside for later |
| investment | an amount of money used for income or profit |
| return on investment | measurement of an investment profitability that compares the net profit to the investment cost. |
| compound interest | interest earned on the original principal amount plus the accumulated interest from previous periods |
| stock | a type of security that signifies ownership in a corporation and represents a claim on a portion of the company's assets and earnings. |
| bond | a debt security where an investor lends money to an issuer (for example a corporation or government) for a set period, in exchange for regular interest payments and the return of the principal amount at a future maturity date. |
| diversification | a risk management strategy that involves spreading investments across a variety of assets to reduce portfolio volatility. |
| retirement account | a savings and investment plan designed to help individuals set aside money for their post-employment years, with benefits like tax advantages on contributions and growth. |
| stock market | a financial network where buyers and sellers trade shares of publicly traded companies. |
| dividend | a distribution of a portion of a company's earnings to its shareholders, representing a reward for owning stock in the company. |
| mutual fund | a financial product that pools money from many investors to buy a diversified portfolio of securities, such as stocks, bonds, and other assets. |
| common stock | a unit of ownership in a corporation, giving shareholders voting rights and a claim on profits after creditors and preferred stockholders are paid. |
| preferred stock | a hybrid security with characteristics of both stocks and bonds, offering a fixed dividend payment that takes priority over common stock dividends. |
| corporate bond | a debt security issued by a corporation to raise capital, with the issuer promising to repay the principal amount plus periodic interest payments to the bondholder by a specific maturity date. |
| government bond | a debt security issued by a government to raise capital for public spending |
| beneficiary | a person or entity designated to receive the benefits of an account, policy, or asset after the owner's death |
| executor | the person named in a will to manage a deceased person's estate. |
| trust | a legal arrangement that holds assets for the benefit of designated beneficiaries, with a third party, the trustee, managing the assets according to the creator's (grantor's) instructions. |
| estate | the total value of a person's assets and liabilities at the time of their death. |
| will | a legal document that outlines how an individual's assets will be distributed after their death, including specifying who inherits property, who will be the guardian for minor children, and who will act as the executor to manage the estate. |
| power of attorney | a legal document that gives a designated person, called an agent, the authority to manage the principal's financial affairs. |
| investment liquidity | the ease and speed with which an asset can be converted into cash without significantly affecting its market price. |
| probate | the court-supervised legal and financial process of identifying and gathering a deceased person's assets, paying their debts and taxes, and distributing the remaining assets to heirs. |
| personal financial planning | the process of managing your money to achieve your short- and long-term goals. |
| estate planning | the financial and legal process of arranging the management and distribution of your assets and property both during your life in case of incapacitation and after your death. |
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queenciraia