Investment Tools and Retirement Accounts

Comprehensive vocabulary flashcards covering stock market basics, debt securities, cash equivalents, and retirement savings vehicles.

Investing

Putting money into financial products with the goal of growing it over time.

Stock

A portion of ownership in a corporation that serves as a way to raise money; also referred to as shares or equities.

Dividends

Portions of a corporation’s profit paid out to stockholders every quarter ($3\text{ months}$).

Capital Gain

The profit earned when a stockholder sells stock for more than he or she paid for it.

Capital Loss

The financial loss incurred when a stockholder sells stock for less than he or she paid for it.

Diversification

The strategy of spreading investments across many different companies or assets to minimize overall risk.

Common Stock

A class of stock where the stockholders hold voting rights as owners of the company.

Preferred Stock

A class of stock where stockholders do not vote in company decisions but receive dividends before common stockholders.

Stock Exchanges

Organized markets where businesses buy and sell stock, such as the New York Stock Exchange and NASDAQ.

Stockbroker

A licensed intermediary who facilitates transactions between buyers and sellers of stock.

Brokerage Firms

Businesses that specialize in trading stocks and other financial securities.

Daytrader

A stockbroker or investor who buys and sells large amounts of stock rapidly to turn a profit within a single day’s trading.

Bull Market

A financial market characterized by steadily rising stock prices over time.

Bear Market

A financial market characterized by steadily falling stock prices over time.

Bond

A debt investment representing a loan made by an investor to a company or government entity.

Junk Bonds

High-yield corporate bonds with higher default risks and higher potential returns, issued by companies with lower credit ratings.

T-Bills

Short-term Treasury bonds lasting from $4\text{ weeks to }1\text{ year}$ that pay no regular interest and are sold at a discount.

T-Notes

Medium-term Treasury bonds with maturities of $2\text{ to }10\text{ years}$ that pay interest every $6\text{ months}$.

T-Bonds

Long-term Treasury bonds with maturities of $20\text{ to }30\text{ years}$ that pay interest every $6\text{ months}$.

I-Bonds

Inflation-protected U.S. government bonds lasting up to $30\text{ years}$ that feature a combined fixed and variable rate.

Certificate of Deposit (CD)

A low-risk savings product with a guaranteed return and fixed interest rate that locks funds for $6\text{ months to }5\text{ years}$.

Mutual Fund

A professionally managed investment pool that gathers money from multiple investors to buy a diversified portfolio.

Money Market Account

A savings account offering higher interest than standard accounts, check-writing privileges, and easy access, but requiring a minimum deposit.

High-Yield Savings Account (HYSA)

An online savings account offering higher interest rates than traditional banks, FDIC-insured up to $\$250{,}000$.

Exchange-Traded Funds (ETFs)

Pooled funds that hold a diversified portfolio similar to mutual funds but trade on stock exchanges like individual stocks.

Liquid Assets

Assets or financial resources that can be converted into cash rapidly without sacrificing substantial value.

401(k)

An employer-sponsored plan allowing pre-tax contributions up to $\$23{,}000/\text{year}$ ($2025$ limit), often with an employer match, that grows tax-deferred.

Individual Retirement Account (IRA)

A self-directed personal retirement account independent of an employer, featuring an annual contribution limit of $\$7{,}000$ for individuals under $50$ ($2025$).

Traditional IRA

A retirement account that allows pre-tax or tax-deductible contributions and tax-deferred growth, with taxes due upon withdrawal in retirement.

Roth IRA

A retirement account funded with after-tax money, providing tax-free investment growth and completely tax-free withdrawals in retirement.