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savings nd investing
savings and investing vocab words practice
| Term | Definition |
|---|---|
| savings | Saving is the process of setting aside a portion of one's income for future use rather than immediate consumption. |
| investment | Investment is the act of allocating money or capital to an asset or project with the goal of generating future income or appreciation. |
| return on investment | Return on investment is a profitability metric that calculates the gain or loss generated from an investment relative to its cost expressed as a percentage. |
| compound interest | Compound interest is the interest calculated on the initial principal and on all the previously accumulated interest. |
| stock | Stock refers to the ownership shares in a company which are bought and sold on stock markets. |
| bond | A bond is a debt instrument that a company sells to raise capital by borrowing money from investors. |
| diversification | Diversification is the strategy of spreading investments across various asset types such as stocks, bonds and cash to reduce overall risk. |
| retirement account | A retirement account is a specialized tax advantaged investment account designed to help individuals save money for their post-work years. |
| stock market | The stock market is a global marketplace for buying and selling shares of publicly traded companies. |
| dividend | A dividend is a distribution of companies profits to its shareholders paid in cash stock or other property. |
| mutual fund | A mutual fund is an investment vehicle that pools money from many investors to purchase a diversified portfolio of securities like stocks, bonds or money market instruments. |
| common stock | A common stock is a type of share that represents partial ownership in a company. |
| preferred stock | Preferred stocks is a hybrid security that acts like a cross between a stock and a bond offering a fixed dividend but with a lower risk and less growth potential than a common stock. |
| corporate bond | A corporate bond is a debt security issued by a corporation to borrow money from investors. |
| government bond | A government bond is a debt based investment in which an investor essentially loans money to a government in exchange for regular interest payments and the return of their principal investment when the bond reaches its maturity date. |
| beneficiary | A beneficiary is a person or entity legally designed to receive assets or benefits from an account holder typically after their death. |
| executor | An executor is the person named in a will to carry out the deceased's final wishes, a role that involves managing and distributing the estates assets after death. |
| trust | The belief in a company's reliability, integrity and ability to deliver on its promises. |
| estate | A large country property owned by one person or the total of all a person's assets and possessions especially after they have died. |
| will | A legal document like a last will and testament that specifies how your assets should be distributed after your death. |
| power of attorney | The ease and speed with which an investment can be bought or sold and converted to cash without significantly impacting its price. |
| investment liquidity | The ease and speed with which an investment can be bought or sold and converted to cash without significantly impacting its price. |
| probate | Court supervised legal process of administering a deceased person's estate to validate the will to pay debts and taxes and distribute the remaining asset to the beneficiaries. |
| personal financial planning | The comprehensive ongoing process of managing your money to achieve your life goals and financial security. |
| estate planning | The comprehensive process of arranging for the management and transfer of your assets and personal affairs in the event of your death. |