Financial Literacy Part 2

A set of vocabulary flashcards covering key financial concepts including savings, types of accounts, assets, and investment principles.

Importance of Saving Money

Money saved is money earned, providing benefits such as career freedom, long-term security, and the ability to manage emergencies.

High Yield Saving Account

A savings account that carries a higher interest rate compared to a regular savings account.

Certificate of Deposit

A time deposit that locks money in for a certain period at a higher interest rate compared to regular savings.

Bond

A loan from an investor to a borrower, who pays back the loan with interest.

Mutual Funds

An investment vehicle that pools money from multiple investors to purchase stocks, bonds, and short-term debt.

401(k) Plan

An employer-sponsored retirement plan where contributions are matched by the employer up to a certain limit.

Roth IRA

A retirement account where contributions are made with after-tax dollars, allowing tax-free growth.

Traditional IRA

A retirement account that allows tax-deferred growth on contributions until withdrawal.

Financial Assets

Tangible assets that are easily convertible to cash, such as stocks, bonds, and cash reserves.

Real Assets

Value-generating physical assets owned by a business, such as land, buildings, and machinery.

Shares

An investment vehicle representing ownership in a company.

Stocks

A term synonymous with shares, used in the context of ownership in multiple companies.

Risk and Reward Relationship

The principle that every investment entails risk, requiring risk minimization and informed decision making.