| A | B |
|---|
| Compound Interest | The interest earned on both interest and principal |
| corporate stocks | The investment with the most risk |
| Bond | An “IOU,” certifying that you loaned money to a |
| The rule of 72 | The calculation you can do if you know the interest rate to find out how many years will it take to double your money. |
| Stock | Represents ownership in a company |
| Bonds | Issuer agrees to pay investors a fixed interest rate for a fixed period of time. |
| Mutual funds | Professionally managed portfolios made up of stocks, bonds, and other investments |
| Real estate | This type of investment offers an excellent protection against inflation. |
| Inflation | The steady rise in the general level of prices |
| Liquidity | How quickly and easily an assets can be converted to cash |
| Time Value of Money | Money to be paid out or received in the future is not equivalent to money paid out or received today. |
| Savings Account | Provides an easily accessible place for people to store their money to meet daily living |
| 3-6 months of income | What do financial experts recommend an individual keep in a savings account for emergenices? |
| Diversification | To spread around your money into different investments. |
| The KISS rule | Keep things simple and never buy anything you don't understand |
| Capitial Gains | Profits from the sale of a capital asset such as stocks, bonds, or real estate. |
| Social Security | A government program that gives retired and elderly people a monthly amount of money for living, health care, and disability benefits. |
| Pensions | a plan set up by an employer to help employees save for retirement. |
| 401K or 403B | This is a retirement plan set up by an employer through an investment company, insurance company, or bank. |
| IRA | Allows a person to contribute up to $5,000 of pre-tax earnings per year. |
| IRA | Individual Retirement Account |
| Roth IRA | While the $5,000 annual contribution to this plan is not tax-deductible, the earnings on the account are tax-free after five years. |
