EverFI Vocab Quiz (9/19/2024)

Investment

Putting money into assets like stocks, bonds, or real estate with the goal of making it grow over time. It's riskier but offers the potential for higher returns.

Savings

Setting aside money in a safe place, like a bank account, for future use. It's usually low-risk and earns a small amount of interest.

Portfolio Diversification

Spreading your investments across different assets (like stocks, bonds, and real estate) to reduce risk. If one investment performs poorly, others might perform well, balancing the overall risk.

Risk

The chance of losing money on an investment. Higher-risk investments can lose value but might offer higher returns.

Reward

The potential profit you can earn from an investment. Usually, the higher the risk, the higher the potential reward.

Dividend

A portion of a company's profits paid to shareholders, usually on a regular basis. It's a way for investors to earn money from stocks without selling them.

Time Horizon

The length of time you plan to hold an investment before you need the money. Shorter time horizons might mean taking less risk, while longer ones allow for more risk-taking.

Risk Tolerance

Your ability and willingness to lose some or all of your investment in exchange for potential higher returns. It's influenced by factors like age, income, and financial goals.

Stocks

Shares of ownership in a company. When you buy stocks, you own a small part of that company and can benefit from its growth.

Small Cap

Shares of companies with a market capitalization between $250 million and $2 billion.

Mid Cap

Shares of companies with a market capitalization between $2 billion and $10 billion.

Large Cap

Shares of the largest companies in the United States, with a market capitalization of $10 billion or more.

Bonds

Loans you give to companies or governments in exchange for regular interest payments. They are generally less risky than stocks but offer lower returns.

Mutual Funds

A collection of various investments like stocks and bonds, managed by a professional. Investors buy shares in the fund, giving them access to a diversified portfolio.

Certificate of Deposit (CD)

A savings account with a fixed interest rate and fixed term, offered by banks. It usually has a higher interest rate than regular savings accounts but locks up your money for a set period.

ETF (Exchange-Traded Fund)

A type of investment fund that is traded on stock exchanges, much like individual stocks. It holds a collection of assets, offering diversification like a mutual fund but with the flexibility of stock trading.

Money Market Account

A type of savings account that usually offers higher interest rates in exchange for higher minimum balances. It's considered low-risk and provides easy access to your money.

Cryptocurrency

Digital or virtual currencies that use cryptography for security. Bitcoin is the most well-known example. They are highly volatile and risky investments.

401(k) Account

A retirement savings plan offered by employers in the U.S., allowing employees to save and invest a portion of their paycheck before taxes are taken out. Employers may also match contributions.

Investor Sentiment

The overall attitude of investors toward a particular market or investment. It's influenced by news, economic indicators, and market trends and can drive market movements.

CFP (Certified Financial Planner)

A professional certification for financial planners who have met education, experience, and ethical standards. CFPs help individuals with financial planning, including investments, taxes, and retirement.