Accounting Summative

Stocks

Securities that represent ownership in a corporation, entitling shareholders to a portion of the company's assets and profits.

Bonds

Loans made to governments in exchange for a set interest rate payment

Mutual Funds

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

Index Fund

a type of investment that tracks the performance of a specific benchmark like the S&P 500

Stock market Index

A statistical measure that reflects the performance of a specific group of stocks, representing a portion of the overall market.

IRA Tradional

an individual retirement account (IRA) designed to help people save for retirement, with taxes deferred on any potential investment growth

IRA Roth

an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year.

401k

a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts

Risk

the degree of uncertainty and/or potential financial loss inherent in an investment decision

Compound Intrest

when you earn interest on the money you've saved and on the interest you earn along the way

The 4 percent rule

retirees can safely withdraw 4% of their total portfolio balance in the first year of retirement and then adjust that amount annually for inflation

Trader VS Investor

A trader focuses on short-term price movements to earn quick profits, while an investor holds assets for the long term to build wealth over time

Saving VS investing

Savings are meant for short-term needs and emergencies, offering low risk and easy access to your money. Investing is aimed at long-term wealth building, with higher risk and the potential for greater returns.

importnace of saving early for retirement

It gives your money more time to grow in a account

Expense ratios

measures how much you'll pay over the course of a year to own a fund.

Time horizon

the number of months, years, or decades you need to invest to achieve your financial goal

Default risk

the possibility that a borrower fails to meet its debt obligations by not being able to make timely payments of interest and/or principal