Savings and Investing Review

A series of flashcards focused on key vocabulary and definitions related to savings and investing concepts.

Risk Tolerance

The amount of uncertainty or potential financial loss that an individual is willing to withstand in their investment decisions.

Emergency Fund

Savings account that contains a reserve of funds to cover unexpected expenses that may arise.

Diversification

The process of spreading investments across various assets to reduce risk.

Asset Allocation

The strategy of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.

Stocks

Securities that represent an ownership share in a company.

Bonds

Debt securities issued by corporations or governments, promising to pay back the borrowed amount at a specified date with interest.

Real Estate Investment Trust (REIT)

A company that owns, operates, or finances income-producing real estate, offering a way for individuals to invest in large-scale, income-generating real estate.

Cryptocurrency

Digital or virtual currency that uses cryptography for security and operates independently of a central bank.

Penny Stocks

Low-priced stocks that are typically traded outside of the major market exchanges and can be highly speculative.

401K Plan

A retirement savings plan sponsored by an employer that allows employees to save a portion of their paycheck before taxes are taken out.

Roth IRA

An individual retirement account allowing a person to invest after-tax income; qualified withdrawals are tax-free.

Yield

The income return on an investment, expressed as a percentage of the investment's cost or current market value.

Market Order

A request to buy or sell a stock at the current market price.

Stop Price

A price set to trigger a market order when reached, used as a risk management tool.

Capital Gains

The profit made from the sale of an asset when its selling price exceeds its purchase price.

Tax-Exempt Income

Income that is not subject to tax under federal law.

Financial Planner

A professional who helps individuals develop a plan for achieving their financial goals.

Investment Liquidity

The ease with which an asset can be converted into cash without significantly affecting its price.