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Savings & Investing
| Term | Definition |
|---|---|
| savings | money that is set aside for future or unexpected expenses |
| investment | money or time being put into an asset expecting to earn a profit or return in the future |
| return on investment | the measurement used to evaluate the profitability of an investment, comparing the gain or less from the investment to its costs |
| compound interest | investment that includes the returns earned are reinvested to generate more returns over time |
| stock | a portion of corporate ownership or a supply of goods |
| bond | a legal contract to protect a business or its clients from loss |
| diversification | a strategy of where a company expands into new products, services o markets to reduce risk and capture new opportunities |
| retirement account | tax advantaged savings plan created to help individuals save for their future when they stop working |
| stock market | primary market where businesses first issue shares to investors and a secondary market where investors trade shares |
| dividend | a portion of a company's profits that is distributed to its shareholders |
| mutual fund | a business entity that pools money from many investors to create a diversified portfolio of securities, such as stocks and bonds |
| common stock | a security that represents ownership in a corporation giving holders a stake in the company's assets and earnings |
| preferred stock | investment that combines some of the features of bonds with some of the features of stocks |
| corporate bond | a form of debt used by a company to raise capital |
| government bond | a loan made to a government, promising to pay back the original amount at a future date |
| beneficiary | an individual, group, or entity designated to receive benefits or profits from a business agreement, financial arrangement, or legal document |
| executor | individual or entity named in a will to manage the deceased person's estate, a role that also includes carrying out the wills instructions |
| trust | the belief in a company reliability and integrity or a legal structure known as business trust |
| estate | the aggregate of all property, assets, and liabilities owned by an individual or an organization |
| will | a legal document where you state how you want your assets distributed after your death |
| power of attorney | legal document that grants an agent the authority to act on the principles behalf in business and financial matters |
| investment liquidity | how quickly and easily an asset can be converted into cash or how quickly an asset can be invested in without affecting its market value |
| probate | court process where a will is proved valid or invalid |
| personal financial planning | a process a person goes through to understand their current financial situation and to plan for the future |
| estate planning | process of strategically arranging for the management and distribution of an individual's assets both during their lifetime and their death, ensuring wishes are met while minimizing taxes and coasts |
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