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Vocabulary flashcards covering key terms related to saving, interest, banking products, investment vehicles, and retirement accounts.
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Saving
Setting aside money now to use in the future instead of spending it immediately.
Emergency Fund
Money saved specifically to cover unexpected expenses or "bad times."
Interest
The amount of money paid or earned for the use of someone else’s money.
Principal
The original sum of money deposited or borrowed, on which interest is calculated.
Simple Interest
Interest calculated only on the original principal amount.
Compound Interest
Interest calculated on the principal plus any interest already earned (interest on interest).
Liquid Asset
An asset that can be quickly converted into cash with little or no loss in value (e.g., cash in checking or savings).
Traditional Savings Account
A basic bank account that allows deposits, withdrawals, and earns modest interest; insured by the FDIC up to $250,000.
FDIC (Federal Deposit Insurance Corporation)
U.S. agency that insures bank deposits up to $250,000 per depositor, per insured bank.
Minimum Balance
The smallest amount of money that must remain in an account to avoid a bank fee.
Bank Fee
A charge assessed by a bank, often for falling below the minimum balance or for specific account services.
Certificate of Deposit (CD)
A time deposit requiring money to stay in the bank for a fixed term at a promised interest rate; FDIC-insured.
Time Deposit
A deposit that cannot be withdrawn before a specified date without penalty (e.g., a CD).
Savings Bond
A government-issued bond paying a fixed interest rate over a set period, typically doubling in value over time.
Commercial Bank
A for-profit financial institution that charges higher loan rates and pays lower savings rates; insured by the FDIC.
Credit Union
A not-for-profit financial cooperative owned by members, often offering better loan and savings rates; insured by the NCUIF/NCUA up to $250,000.
NCUIF (National Credit Union Insurance Fund)
Federal insurance fund that protects credit union deposits up to $250,000 per member, per institution.
Rule of 72
Shortcut formula (72 ÷ annual interest rate) used to estimate how many years it takes for money to double.
Risk-Return Trade-Off
The principle that potential return rises with an increase in risk; lower risk generally means lower expected return.
Investment
Putting money to work—such as funding a business or buying an asset—with the goal of earning income or capital appreciation.
Capital Appreciation
Growth in the value of an asset or investment over time.
Stock Market
A collection of buyers and sellers of stocks and other investments.
Stock (Equity)
Represents partial ownership in a corporation and a claim on part of its assets and earnings.
Bond
A loan made to a corporation or government for a set time at an agreed interest rate.
Mutual Fund
An investment vehicle that pools money from many investors to buy a diversified portfolio of stocks, bonds, or other securities; not FDIC-insured.
Diversification
Spreading investments across various assets to reduce risk.
Collectibles
Physical items purchased in hopes they will increase in value (e.g., art, coins).
Share of Stock
A single unit of equity ownership in a corporation, carrying the greatest risk and highest potential return among common investments.
Ticker Symbol
A unique series of letters representing a publicly traded company’s stock on an exchange.
Portfolio
A collection of financial investments such as stocks, bonds, and mutual funds.
401(k) Plan
Employer-sponsored, tax-advantaged retirement account funded with pre-tax wages; taxes are deferred until withdrawal.
Roth IRA
Individual retirement account funded with post-tax dollars; withdrawals in retirement are tax-free.
Traditional IRA
Tax-advantaged retirement account where taxes are paid on gains only when money is withdrawn in retirement.
Return
The profit or income generated by an investment, expressed as a percentage of the original amount invested.