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Unit 6 - Investing
| Question | Answer |
|---|---|
| Savings guarantee | Saving guarantees you the money you put away |
| Investing guarantee | Investing has no guarantees |
| Compound Interest | Earning interest on the original amount you deposit plus any interest earned. |
| Stock | A share of ownership in a company |
| Bear Market | Market that has a receding economy and a decline in the stock market |
| Bull Market | Market that has a growing economy and a rise in the stock market |
| Why is it bad to invest all money in individual stocks? | Purchasing individual stocks has a high risk level and can take a lot of time to manage. |
| Bonds | Low to moderate amount of risk and are less risky than stocks |
| One way to earn money by investing in bonds | Through interest collected on your original investment |
| Conservative Risk Taker | Cautious or first-time investor or will need the money in 5 years or less |
| Moderate Risk Taker | Willing and able to accept a moderate level of risk and return |
| Aggressive Risk Taker | someone who can tolerate higher degrees of fluctuation in the value of their investments or someone who won’t need the money from their investments for 15 years or more |
| Characteristic of an index fund | diversified, low risk |
| Custodial Roth IRA Requirements | brokerage account should your parent/guardian open for you if you have taxable income or wages |
| Diversification | spreading money across multiple investments |
| Custodial brokerage account owner | the minor |
| Why is it important for you to understand YOUR risk tolerance before you start investing? | You should create an investment portfolio that includes an amount of risk you are comfortable with. |
| Inflation | Prices for goods and services go up over time |
| Capital gains | Keep the profits from selling high after buying low |