Unit 7: Investing Vocabulary

Comprehensive vocabulary flashcards from the Unit 7 Investing unit, covering investment vehicles, retirement accounts, and market fundamentals.

Investing

Using your money to buy something with the goal of growing your money over time. Investing involves some risk, but it can help you earn more money in the future.

Inflation

The increase in the prices of goods and services over time, which means your money buys less than it used to.

Risk

The chance that you could lose money or not earn the return you expected when you invest.

Rate of Return

The amount of money you earn or lose on an investment, usually shown as a percentage.

Stock Market

is a place where people buy and sell shares of stock in companies.

Stock Exchange

is an organized place where people buy and sell stocks of companies. It connects investors who want to buy stocks with companies and other investors who want to sell them.

New York Stock Exchange (NYSE)

is one of the largest stock exchanges in the world where investors buy and sell shares of companies.

Stock

is a small piece of ownership in a company.

Bond

is a loan that an investor gives to a company or government. In return, the investor receives regular interest payments and gets their money back at the end of the loan period.

Dividend

is money a company pays to its shareholders (people who own stock) as a share of the company's profits.

Capital Gain

is the money you earn when you sell an investment for more than you originally paid.

Coupon

is the interest payment that a bond investor receives from the company or government that issued the bond.

Coupon Rate

is the percentage of interest a bond pays the investor each year based on the bond’s original value (face value).

Portfolio

is a collection of different investments that a person owns, such as stocks, bonds, and funds.

Diversification

means spreading your money across different types of investments to help reduce risk.

Mutual Fund

is an investment that collects money from many investors and uses that money to buy a variety of stocks, bonds, or other investments.

Index Fund

is an investment fund that tracks a group of stocks from a specific market index, instead of trying to pick individual stocks.

ETF (Exchange-Traded Fund)

is a collection of investments (such as stocks, bonds, or other assets) that can be bought and sold on a stock exchange like a stock.

Target-Date Fund

is an investment fund that automatically adjusts its mix of stocks, bonds, and other investments based on the year you plan to reach a financial goal, usually retirement.

401(k) Plan

is a retirement savings account offered by many employers that allows employees to invest part of their paycheck for the future, often with possible employer contributions.

Pension

is a retirement plan where an employer provides regular payments to a worker after they retire, usually based on their salary and years of service.

Individual Retirement Account (IRA)

is a personal retirement savings account that allows people to invest money for retirement and receive possible tax benefits.

Traditional IRA

is a personal retirement savings account that allows people to invest money for retirement. Contributions may reduce taxable income now, but money withdrawn during retirement is usually taxed.

Roth IRA

is a personal retirement savings account that allows people to invest money for retirement. Contributions are made after taxes are paid, and qualified withdrawals during retirement are usually tax-free.