Mutual Funds & Index Funds

Bond

An IOU— governments or companies borrow from you (loan), then pay you back with extra (a.k.a interest)

Opportunity Cost

The potential benefit that is missed when choosing one alternative over another, often considered in financial decisions.

Financial Institution

A business that provides money related services (money helper) such as accepting deposits, making loans, and facilitating transactions.

Interest

A fee received or paid for the use of money.

Invest

Using money now to make more money later. This often involves purchasing assets such as stocks, bonds, or mutual funds with the expectation of generating a return. (You earn profit and/or interest)

Mutual Fund

A collection of stocks/bonds of various corporations.

Principal

The amount of money originally invested.

Risk

The chance of winning/loosing particularly in the growth of an investment. (Possibility of financial loss)

Savings Account

A safe place to keep your money, in which you gradually earn interest over time (long-term money growth).

Stock

A small piece of a big company.

Pay Yourself First

To automatically save a specified amount of money for future use (Save first, the spend what’s left).

FDIC

Related to savings account.

Volume

Number of stocks you have (liquidity).

Liquidity

How much cash is immediately available.

Time Horizon

How long a stock will take to mature.

Risk

A chance of loss.

Knowledge

The things you know.