Personal Finace Vocab

Investing Review

Rate of Return

Ratio of money gained or lost on an investment

401(k) Plan

Employer-sponsored retirement savings plan

Bond

A security that pays regular interest and returns principal

Coupon

Annual interest payment on a bond

Diversification

Investing in a variety of stocks, bonds, and/or funds

Dividend

Money from company profits paid out to shareholders

Index Fun

Low-fee portfolio of stocks chosen to track a market index

Individiual Retirement Plan (IRA)

Investing tool for retirement savings

Mutual Fund

Collection of stocks and/or bonds combined into one fund

New York Stock Exchange (NYSE)

World's largest stock exchange located in New York City

Pension

Retirement account maintained by an employer

Roth IRA

Individual retirement account with after-tax income

Stock

Share of a company's value that can be bought or sold

Stock Exchange

Market where shares in corporations are bought and sold

Traditional IRA

Individual retirement account with pre-tax income

Risk

Degree of uncertainty in making money on an investment

Investing

Setting money aside to increase wealth over time

Inflation

General increase in prices and fall in purchasing value

Portfolio

Collection of financial investments

Capital Gain

Profit from the sale of an asset