Financial Literacy and Education Review 1

A comprehensive set of vocabulary flashcards related to financial literacy, budgeting, saving, investing, and financial education.

Financial Literacy

The ability to understand and apply a range of financial skills including budgeting, saving, investing, and personal financial management.

Savings Strategies

Approaches to set aside money for future use, such as automatic transfers, budgeting, and expense tracking.

Emergency Fund

A reserve of money set aside to cover unexpected expenses, ideally covering three to six months of living costs.

50/30/20 Rule

A budgeting guideline that allocates 50% of income to needs, 30% to wants, and 20% to savings.

Mutual Funds

Investment vehicles that pool money from multiple investors to create a diversified portfolio managed by professionals.

ETFs (Exchange-Traded Funds)

Investment funds that are traded on stock exchanges, similar to stocks and often track a specific index.

Cash Reserve Ratio (CRR)

The percentage of total deposits that banks are required to hold as reserves with the central bank, affecting liquidity in the market.

Statutory Liquidity Ratio (SLR)

The percentage of a bank's net demand and time liabilities that must be held in liquid assets to ensure solvency.

Inflation Risk

The risk that the purchasing power of money will decline as prices rise, affecting the real return on savings and investments.

Interest Rate Risk

The risk that changes in interest rates will negatively impact the value of an investment, particularly bonds.

Simple Interest

Interest calculated only on the principal amount of an investment, without compounding.

Compound Interest

Interest calculated on the principal and also on the accumulated interest of previous periods.

Debt Management

The process of managing and paying off debts to minimize financial strain and maintain creditworthiness.

Budget

A financial plan that outlines expected income and expenditures over a specific period.

Investment Portfolio

A collection of financial assets such as stocks, bonds, and real estate owned by an individual or institution.

Grading of Bonds

Classification of bonds based on credit risk and the likelihood of default; includes investment-grade and junk bonds.

Market Risk

The risk of losses in investments due to factors affecting the entire financial market.

Capital Appreciation

The increase in the value of an investment over time, as reflected in its market price.

Income Investing

Investment strategy focused on deriving income from investments, primarily through dividends or interest.

Credit Score

A numerical representation of a person's creditworthiness, based on credit history.

Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio.

Financial Goals

Specific objectives for an individual's or organization's financial future, such as saving for retirement.

Employer-Sponsored Plans

Retirement savings plans offered by an employer, often with matching contributions.

Behavioral Finance

The study of how psychological factors and biases affect financial decision-making.

Risk Tolerance

An individual's ability and willingness to endure fluctuations in the market value of investments.

Net Asset Value (NAV)

The value per share of a mutual fund or ETF, calculated by subtracting liabilities from total assets.

Investment Horizon

The length of time an investor expects to hold a security or a portfolio.

Phishing

A scam strategy used to trick individuals into providing personal or financial information through deceptive emails or websites.

Loan-to-Value Ratio (LTV)

A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.

Market Capitalization

The total market value of a company's outstanding shares of stock, calculated by multiplying the stock price by the number of shares.

Robo-Advisors

Online platforms that provide automated, algorithm-driven financial planning services with little to no human supervision.

Blue Chip Stocks

Shares of well-established companies known for their reliable earnings and dividend payments.

Systematic Investment Plan (SIP)

An investment strategy where a fixed amount is invested at regular intervals in mutual funds.

Equity Financing

Funding a business through the sale of shares or ownership stakes.

Retirement Accounts

Investment accounts designed for saving for retirement, offering tax advantages.

Financial Independence

The ability to live comfortably without reliance on employment income.

Risk Assessment

The process of identifying and analyzing potential risks that may negatively impact an investment.

Financial Planning

The task of determining how a business will afford to achieve its strategic goals and objectives.

Financial Products

Various forms of investments available to investors such as stocks, bonds, and mutual funds.

Personal Finance

The management of individual or family financial activities, including budgeting, saving, investing, and planning.

Economic Indicators

Statistics that provide information about the economic performance and health of a country.

Financial Inclusion

Efforts to ensure all individuals have access to useful and affordable financial products and services.

Wealth Management

Professional financial services designed to manage an individual's total financial assets.

Investment Risk

The potential loss of the original investment or the variability of its returns.

Return on Investment (ROI)

A performance measure used to evaluate the efficiency or profitability of an investment.

Diversification Strategy

An investment strategy that mixes a variety of investments within a portfolio to minimize risk.

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Home Equity Line of Credit (HELOC)

A line of credit secured by a borrower's home equity, allowing them to borrow funds against the value of their home.

Personal Budget

A budget that manages an individual's personal finances by tracking income and expenses.

Fiscal Policy

Government policy regarding taxation and spending to influence the economy.

Inflation Rate

The percentage rate of change in price levels over a specific period of time.

Equity Market

A marketplace for shares of stock issued by companies, allowing for buying and selling among investors.

Risk Management

The identification, assessment, and prioritization of risks followed by coordinated efforts to minimize or control.

Tax-Advantaged Accounts

Investment accounts that offer tax benefits such as IRAs and 401(k) plans.

Retirement Planning Services

Financial advisory services aimed at helping individuals achieve their retirement goals.

Wealth Accumulation

The process of acquiring assets over time to increase net worth.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and regulators.

Financial Literacy Programs

Educational initiatives focused on improving people's knowledge and skills regarding personal finance.

Cash Management

Managing cash flows to ensure sufficient liquidity to meet obligations and maximize returns on cash balances.