| A | B |
|---|
| Risk | The chance that an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment. |
| Stocks | Shares of ownership in a corporation |
| (principal + interest) X Interest rate % | compound interest |
| principal | original money that is invested or saved |
| principal X interest rate % X time | simple interest |
| money market | savings account with a higher interest rate than a savings account that allows you to access your money whenever you need it |
| interest | what you are paid from a bank or credit union to borrow your money, or gained on investments |
| mutual funds | an investment that allows you to buy little pieces of many different companies for one price |
| preferred stock | class of ownership in a corporation that has a higher claim on the assets and earnings |
| blue chip stocks | stock of a large, well-established and financially sound company that has operated for many years |
| growth stock | shares in a company whose earnings are expected to grow at an above-average rate relative to the market |
| common stock | stock that is on the bottom of the priority ladder for ownership structure |
| liquidity | ability to convert assets to cash quickly |
| liquidity risk | type of risk regarding the ability to turn investments into cash or spendable funds |
| fraud risk | type of risk where investments are misrepresented |
| market risk | type of risk where the price of an investment will go down |
| will | legally enforceable declaration of how a person wishes their property to be dispersed after death |
| bull market | a financial market in which prices are rising or are expected to rise. |
| bear market | when prices in a market decline by more than 20%, often accompanied by negative investor sentiment and declining economic prospects. |
| IRA | Individual Retirement Account used to save for retirement |
| 401 K Plan | savings plan sponsored by your employer to save for retirement |
| diversification | a risk management strategy that mixes a wide variety of investments within a portfolio. |
| simple interest | interest earned only the principal |
| compound interest | interest earned on principal AND the interest you already earned |
| savings account | where money can be placed to earn low amounts of interest, easily accessible and is very safe |
| real estate | land and any structures on it that a person owns, money is made when value exceeds mortgage amounts |
| savings bonds | written promise from the government or a corporation to repay a loan with interest on a specific date |
| commodities | a basic good used in commerce that is interchangeable with other goods of the same type. Traditional examples of commodities include grains, gold, beef, oil, and natural gas. Precious metals like gold are a safe haven when markets are volatile |
| collectibles | alternative investments by the IRS and include things like art, stamps & coins, cards & comics, rare items, antiques, and so on. Very risky investments. |
| Certificate of Deposit | alternative to a savings account where money is left for a specific time in order to earn a higher interest rate. These can have penalties for early withdrawals |
