| A | B |
|---|
| Time Value of Money | Relationship among time, money, & rate of interest-compounding is key |
| Risk & Reward | The greater the risk = higher potential returns |
| Income Investments | Owners of these get paid in cash for owning the account or investment |
| Growth Investments | Usually bought and held with hope they will increase in price, over time |
| Bond | A formal agreement where borrower uses your money for set time and you get paid interest |
| Stocks | Riskier investment where shareholders own shares of a company |
| Certificate of Deposit | Like a bond sold by banks or credit unions |
| Money Market Accounts | Like checking accounts with limits on check-writing & higher min. balance for 1st deposit |
| Dollar Cost Averaging | Investing fixed amts. at regular intervals |
| Saving | Putting money away to meet short-term goals |
| Investing | Setting money aside for long-term goals |
| inflation | Rise in cost of goods & services over time |
| Simple Interest formula | Interest=Principle x Int. rate x time |
| Compound interest formula | Amount=P (1+i)raised to the nth power |
| Compound Interest | Earning interest on interest |
| Rule of 72 | To see how long takes to double money: 72/interest rate |
| Stock Market | Financial market- stocks are bought & sold |
| Mutual Fund | Combine investors' money,invest in group of investments |
| Rate of Return | Annual percentage return on an investment |
| Diversification | Investing in several types of investments-reduces risk |
