Needs

Things you need to live, such as food, water, shelter.

Wants

Things you do not need to live, such as a car, phone, or video game.

Short-term needs

Requirements that can be satisfied within a year, such as emergency savings.

Long-term needs

Requirements that take about 10 years to fulfill, such as retirement savings.

Global mutual fund

Includes both U.S. and international investments.

International mutual fund

Invests only in markets outside the U.S.

Money Market Fund

A mutual fund that invests in short-term, liquid securities with the lowest risk.

Income Stocks

Stocks that pay high dividends to investors.

Growth Stocks

Stocks that typically do not pay dividends and are expected to grow over time.

Balanced Fund

A mutual fund that invests in a mix of stocks and bonds.

Tax avoidance

The legal process of minimizing tax liability on income tax returns.

April 15th

The deadline for filing personal income tax returns in the United States.

Interest Rates

The cost of borrowing money, which affects spending and saving behaviors.

401K

A retirement savings plan offered by for-profit employers allowing employees to save and invest part of their paychecks.

Traditional IRA

A tax-deferred retirement savings account where up to $7,000 can be set aside annually.

Roth IRA

A retirement account that allows you to withdraw money tax-free; taxes are paid upfront.

Common Stock

Equity that pays fluctuating dividends and is paid after preferred stock in case of liquidation.

Preferred Stock

Equity that pays fixed dividends and gets paid first if a company liquidates.

Defensive Stock

Stocks that are resistant to economic downturns, such as utility companies.

Cyclical Stock

Stocks that follow the business cycle, like those in hotel or airline industries.

Blue Chip Stock

Stocks of well-established companies known for their financial stability.

Speculative Stock

Cheap stocks, typically under $5 each, with higher risk and potential for high reward.

Gross Pay

Total earnings before deductions such as taxes and other withholdings.

Net Pay

Income remaining after all deductions and taxes are taken out.

Simple Interest Formula

Interest calculated only on the principal amount; does not include compounded interest.

Savings Account

A low-risk account used for emergencies, typically with a lower interest rate.

Systematic Investing

Regular investing over time, often for retirement.

Strategic Investing

Managing a portfolio with a more focused investment strategy.

Speculative Investing

Investing with a high level of risk for potentially high returns.

Bull Market

A market condition in which prices are rising or expected to rise.

Bear Market

A market condition in which prices are falling or expected to fall.

Stock Index

A measurement of a section of the stock market, calculated from the prices of selected stocks.

Stock Exchange

A marketplace where stocks are bought and sold.

Variable Expenses

Monthly expenses that fluctuate, like food or entertainment.

Fixed Expenses

Recurring expenses that do not change, like rent or mortgage payments.

Capital Gain

The profit made from selling an asset for more than its purchase price.

Tax-Deferred Growth

Investment grows without being taxed until withdrawal, as in Traditional IRAs.

Tax Exempt

Accounts like Roth IRAs where taxes are paid before contributions.

Callable Bond

A bond that can be redeemed before its maturity at the issuer’s discretion.

Convertible Bond

A bond that can be converted into a predetermined amount of the company’s equity.

Net Worth

The difference between assets (what you own) and liabilities (what you owe).

Liquidity

The ease with which an asset can be converted into cash.

Bankruptcy Causes

Reasons for financial failure, including job loss, health problems, and divorce.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Disposable Income

Money left after taxes, used for discretionary spending.

Discretionary Income

Income available for saving or spending after necessary expenses are paid.

Checkbook Register

A record of all transactions made in a checking account.

Annual Percentage Yield (APY)

The interest rate paid on an investment for one year, factoring in compound interest.

Annual Percentage Rate (APR)

The yearly interest rate charged on borrowed money.

Simple Interest vs. Compound Interest

Simple interest is calculated solely on the principal, while compound interest is calculated on the principal and accrued interest.

Opportunity Cost

The value of what you give up when choosing one option over another.

Dividend

A portion of a company's earnings distributed to shareholders.

Optional Deductions

Deductions that are not legally required, such as contributions to retirement accounts.

Required Deductions

Mandatory deductions from pay such as taxes and Social Security.

Mutual Funds

Investment funds that pool money from many investors to purchase securities.

Brokerage Firms

Companies that facilitate the buying and selling of securities.

Credit Unions

Nonprofit financial institutions that provide savings accounts and loans at low interest rates.

Full-Service Banks

Banks that offer a wide range of financial services including loans and investment options.