Money Matters Spring Final Review

Variable Expense

Expenses that vary from month to month, such as groceries, entertainment, and dining out.

Fixed Expense

Expenses that remain constant each month, like rent, mortgage payments, or insurance premiums.

Long-Term Goal

 A desired achievement or outcome that typically requires substantial time and effort to accomplish, such as buying a house or saving for retirement.

Gross Income

Total income earned before deductions such as taxes and retirement contributions are subtracted.

Net Income

 Income remaining after deductions like taxes and other expenses have been subtracted from gross income.

Principal on loan

The original amount of money borrowed or invested, separate from any interest or additional fees.

Certificate of Deposit (CD)

A savings certificate with a fixed maturity date and a specified interest rate, issued by a bank or credit union.

Needs VS Wants

Needs are necessities essential for survival, while wants are desires or preferences that are not necessary for basic living.

5% down payment on a $17,000 car

$850 (5% of $17,000).

15 Year Mortgage VS 30 Year Mortgage

 A 15-year mortgage typically has higher monthly payments but lower overall interest costs compared to a 30-year mortgage.

FSBO: "For Sale By Owner

A method of selling property without the use of a real estate agent.

Housing Percentage Recommendation

 A guideline suggesting the portion of income that should be allocated towards housing costs, usually around 25-30% of gross income.

Term Life Insurance

 Life insurance that provides coverage for a specific term or period of time, typically offering lower premiums compared to whole life insurance.

W4

A tax form completed by employees to indicate their withholding allowances for federal income taxes.

Mutual Fund

An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.

Stock

Ownership in a corporation, representing a claim on part of the company's assets and earnings.

Premium (Insurance)

The amount paid for insurance coverage, typically on a monthly or annual basis.

6 Characteristics of Money

Durability, portability, divisibility, uniformity, limited supply, and acceptability.

What does a stock represent?

Ownership stake in a company, entitling the holder to a portion of the company's assets and profits.

Preferred stock

 A class of stock that typically pays a fixed dividend and has priority over common stock in terms of dividends and asset distribution in case of liquidation.

Dividends

 Payments made by a corporation to its shareholders, usually as a distribution of profits.

IPO

Initial Public Offering - the first sale of a company's stock to the public.

Mutual Fund advantages and disadvantages

Advantages include diversification, professional management, and liquidity; disadvantages may include fees, lack of control, and potential for underperformance.

Diversification

Spreading investments across different assets to reduce risk.

Diversifying between sectors?

Allocating investments across different industries or sectors to minimize the impact of downturns in any single sector.

Speculative investment

 An investment with a high degree of risk, often involving the possibility of significant gains or losses.

Bear Market

A market characterized by declining prices, pessimism, and a general lack of confidence among investors.

Bull Market

A market characterized by rising prices, optimism, and investor confidence.

Blue Chip

 A large, well-established, and financially stable company with a history of reliable performance.

Bond

A fixed-income investment where an investor loans money to an entity (typically a corporation or government) for a defined period at a fixed interest rate.

Capital

Financial assets or the value of assets available for use in producing further assets.

Commodities

Raw materials or primary agricultural products that can be bought and sold, such as gold, oil, or wheat.

Insider Trading

Trading of a public company's stock or other securities based on material, non-public information about the company.

PE Ratio

 Price-to-Earnings Ratio - a measure of a company's current share price relative to its per-share earnings.

Penny Stock

Low-priced, speculative stocks typically traded over-the-counter, often with small market capitalizations and high volatility.

Portfolio

A collection of investments owned by an individual or institution.

Share

A unit of ownership in a company, representing a proportional claim on its assets and earnings.

Speculator

 An investor who takes on higher risk in the hope of making significant short-term gains.

Trading Session

A period during which financial markets are open for trading.

Volume

The number of shares or contracts traded in a security or market during a given period.

Stockbroker

 A licensed professional who buys and sells securities on behalf of clients.

Earnest Money

A deposit made by a buyer to demonstrate serious intent to purchase a property.

Mortgage

A loan used to purchase real estate, with the property itself serving as collateral for the loan.

Deed

A legal document that transfers ownership of real estate from one party to another.

Bitcoin

A digital or cryptocurrency that operates on a decentralized network using blockchain technology.