Financial Literacy: Investing and Retirement

Investing

the process of setting money aside to increase wealth over time for long-term financial goals, such as retirement 

Return on Investment (ROI)

the measurement of gain or loss generated on an investment relative to the amount of money invested​​​​​​​

Risk-Return Ratio

relationship of expected return (profit you expect to make) compared to the amount of risk (amount you stand to lose if the price goes down) taken with a given investment  ​​​​​​​

Liquid Asset

an asset that can be easily bought or sold

Stock Market

a financial market that trades shares of ownership of public companies

Stock

a security that represents part ownership or equity in a company

Stock Market Index

a measurement of a section of the stock market, typically a weighted average of the prices of selected stocks

Bull Market

when prices in a financial market are on the rise or expected to rise

Bear Market

when prices in a financial market experience a prolonged decline

Fixed Annuity

annuity that offers low, guaranteed rates of interest and fixed income payments in retirement

Variable Annuity

a type of annuity that can vary in value based on the performance of the mutual funds inside it

Portfolio

a list of your investments

Prospectus

a description of the investing strategy the mutual fund management company will use to invest your money

Individual Retirement Arrangement (IRA)

a tax-advantaged investing account that people use to save for retirement

401(k)

a qualified retirement savings plan offered by a company to its employees who contribute money from their gross pay

Qualified Retirement Savings Plans

an employer-sponsored retirement plan that has a special tax treatment

Diversification

the practice of dividing the money a person invest among different types of investments in order to lower risk

Capitalization

the total dollar market value of a company or how much a company is worth

Retirement Planning

the process of figuring out how much money you’ll need in retirement and creating a plan to get there

Dividen

a distribution from the net profits of a company to its shareholders

Estate Planning

preparation of tasks to manage an individual’s assets after death

Will

a legal document listing how a person wants their assets distributed after their death

Charitable Organization

an organization set up to provide help and raise money for those in need

Net Worth

Net worth is everything you own minus everything you owe.

Mutual Funds

an investment program funded by shareholders that trades in diversified holdings and is professionally managed.

Bank CD’s

A certificate of deposit (CD) is a type of low-risk savings account that can boost the amount you earn in interest in exchange for keeping your money deposited for a set amount of time.

Bonds

A bond is a fixed-income investment issued by governments or corporations to raise funding.A bond is a fixed-income investment issued by governments or corporations to raise funding.

Stocks

A stock, also called an equity or a share, is an ownership stake in the corporation that issued it.

Real Estate

property consisting of land or buildings.

Liquidity

the availability of liquid assets to a market or company.

Administrative Costs (fees)

An administration fee is a charge imposed by a company, property management firm, or service provider to cover the costs of administrative tasks—such as document handling, record keeping, or compliance management—related to a transaction or agreement.

Asset

a useful or valuable thing, person, or quality.