| A | B |
|---|
| saving | people do this for short-term goals, money is safe and earns small amount of interest |
| investing | people do this for long-term goals, no guarantee that money will grow, could result in high return |
| time value of money | relationship among time, money and rate of interest |
| inflation | rise in cost of goods and services over time |
| earned interest | payment you receive for allowing bank to use your money |
| compound interest | earning interest on interest |
| rule of 72 | length of time to double money, found by dividing 72 by interest rate or years |
| stock market | place where stocks are bought and sold |
| dividends | profits you receive as stockholder |
| capital gain | difference between higher selling price and lower purchase price of stock |
| rate of return | annual percentage return on investment |
| income investment | getting paid in cash for investment |
| growth investment | buy and hold investment hoping it will increase in price, over time |
| capital loss | difference between lower selling price and higher purchase price of stock |
| savings account | banking product earning small amount of interest |
| liquid | easily converted to cash |
| bond | formal agreement where borrower can use your money for set period of time and you, as lender, will get paid interest in return |
| certificate of deposit | loaning money to financial institution for set perio fo time and getting paid interest in return |
| U.S. savings bond | give your money to government for set period of time and get paid interest in return |
| money market account | similar to checking account with higher rate of interest and limit on number of checks written per month |
| government bond | bond that pays the highest rate of interest for income investements |
| yield | bond's potential return |
| real estate | property like land or buildings used to generate a profit |
| stock | ownership in company, can potentially lose money with this growth investment |
| collectible | item that is rare in number and hoping to increase in value over time |
| mutual fund | money used from many investors to invest in many stocks |
| diversification | reducing investment risk by putting money in several types of investments |
| dollar cost averaging | practice of investing fixed amount in same investment at regular intervals |
