Investing Review 1

Vocabulary practice flashcards covering payroll formulas, tax forms, credit concepts, inflation types, economic metrics, and investment definitions based on the lecture transcript.

Gross Pay

What an employer is actually paying you.

Net Pay

What you have leftover after taxes and deductions.

Net Pay Formula

$$\text{Total Gross} - \text{Total Taxes} - \text{Total Deductions}$$

Federal Taxable Gross Formula

$$\text{Total Gross} - \text{Tax Deductions}$$

Monthly Pay Formula

$$\text{Semi-monthly paycheck} \times 2$$

Semi-Monthly Paycheck Formula

$$\text{Monthly pay} \div 2$$

Progressive Taxes

Federal income tax stairsteps where lower taxes occur at lower rates.

Regressive Taxes

Taxes that negatively affect low-income taxpayers, such as flat taxes or exercise tax (sales tax).

1099 Form

A form that tracks income earned outside of traditional employment, such as freelance work, investments, rent, or retirement distributions.

W-2 Form

A company tax form given once a year detailing total taxable wages and amounts withheld for federal, state, and local taxes.

1040 Form

An annual federal income tax return form due April 15 (unless a weekend) used for tax reconciliation to total yearly earnings, including wages, tips, salaries, dividends, and interest.

W-4 Form

An IRS document filled out to tell an employer how much federal income tax to withhold from a paycheck, aiming to keep the balance as close to zero as possible.

Credit Bureaus

TransUnion, Experian, Equifax, and Innovis.

Credit Lock

A method of locking credit where data can still be sold, differing from a credit freeze.

Secured Credit Cards

Credit cards designed to help build or repair credit.

Snowball Method

A debt repayment plan: list your debt, attack the smallest debt, get extra money, pack the payment, and repeat.

FICO Score

A credit score developed by the Fair Isaac Corporation.

FICO Score Ranges

Poor: $< 580$, Fair: $580 - 669$, Good: $670 - 759$, Very Good: $740 - 799$, Exceptional: $800+$

Percent of Balance + Finance Charge Method

A credit card payment calculation where companies use an APR (annual percentage rate) as the finance charge, added to the percent of the balance.

Percent of Balance Method

A minimum payment calculation where credit card companies usually charge between $1\%$ and $5\%$ of the balance.

Charge Cards

A payment card requiring the cardholder to pay the full balance each month without any interest applied and with no spending limits.

Law of Supply and Demand

Combines two fundamental economic principles describing how changes in the price of a resource, commodity, or product affect its supply and demand.

Normal Inflation Rate

$$2\%$$

Demand-Pull Inflation

Inflation that occurs when demand for goods/services exceeds production capacity.

Cost-Push Inflation

Inflation that occurs when production costs increase prices.

Built-In Inflation

Inflation that occurs when prices rise and wages rise as well in order to maintain living costs.

Economic Bubble

An economic phenomenon that is not going to last and is not sustainable.

Consumer Price Index (CPI)

A measure that examines the weighted average of prices of a basket of goods and services that are of primary consumer needs.

8 Major Groups of the CPI

Housing, Recreation, Apparel, Foods and Beverages, Medical Care, Transportation, Education and Communication, and Other Goods and Services.

The Fed

The Federal Reserve System, a network of regional banks that acts as the central bank of the United States.

Erosion of Purchasing Power

The biggest overall effect of inflation.

Stagflation

An economic cycle characterized by slow growth, high unemployment, and high inflation.

Interest

Money that you receive from an investment.

Stock

A financial instrument that represents a fractional ownership stake (equity) in a corporation.

Portfolio

A group of stocks.

Capital Gain

The profit made when selling a capital asset—like stocks, bonds, or real estate—for more than the purchase price.

Capital Loss

The money lost when selling an investment or capital asset for less than its original purchase price.

Credit Bureau That Got Hacked

All of them but really Equifax