money matters - units 6-8
what are the most important factors in calculating your credit score (in order)
1) payment history 2) credit utilization - % avaibale credit being borrowed 3) length credit history - length of time account has been open to time of most recent action 4) new credit ==> 10% total FICO score 5) credit mix
fixed rate
An interest rate that doesn't change.
what does it mean to have a diversified portfolio
Definition: Investing in different asset classes and in securities of many issuers in an attempt to reduce overall investment risk and to avoid damaging a portfolio's performance by the poor performance of a single security, industry, (or country).
typical IRA
There are two main types of IRAs available to the public -- traditional and Roth -- and they both allow a maximum contribution of $5,500 for those aged 49 and under, and $6,500 for people ages 50 and up, as of 2016. These contribution limits tend to rise every few years with inflation.
who looks at your credit report
you are entitled to a free copy of your credit report once every 12 months from each of the three major credit reporting agencies, TransUnion, Experian and Equifax.
does having a diversified portfolio guarantee you won't lose money
*NO* --> The goal of diversification is not necessarily to boost performance—it won't ensure gains or guarantee against losses. But once you choose to target a level of risk based on your goals, time horizon, and tolerance for volatility, diversification may provide the potential to improve returns for that level of risk.
who are the 3 main credit reporting bureaus
- equifax - experian - transunion
what are things that will NOT appear on a credit report
- income - job loss - merging lives - criminal record - medical history - "unusual" loans
when is compound interest most beneficial: long term or short term
- mostly used for savings, investments, loans - *long-term wealth* beneficial - periods of compounding (quarterly > annually) - dividend investing not-beneficial - loans // debts
what are the 3 main index funds in the US
- vanguard total stock market index - vanguard small - cap value index - vanguard FTSE all-world ex - US index
amortized loan
-a loan with scheduled periodic payments that consist of both principal and interest -payment pays the relevant interest expense for the period before any principal is paid and reduced.
what are some ways you can become a victim of fraud
-on the phone -from email -from mail
what helps you build credit
1) apply for a secured credit card 2) apply for a credit builder loan 3) get a co-signer 4) become an authorized user on someone else's credit card 5) get credit for the rent you pay
what do you do when you are having trouble making your loan payments?
1) pay loan late - try w/in 30 days - credit not damaged 2) consolidate / refinance - might need a different loan? 3) secured loans --> second loan - harder to work - vehicle could be repossessed - could lose in foreclosure 4) communicate w/ lenders - change due date of loans 5) prioritize payments - stop paying unsecured loans
benefits of owning stock in a company
11 Hidden Perks of Owning Stocks. The main reason investors buy stocks is to make money. Returns on stocks generally come in two forms: dividends and capital gains. For a small group of stocks, though, there are additional hidden benefits offered to shareholders.
how should your risk tolerance for investing change as you get older
20s-30s - loan up to risk b/c young & have time for recovery 40s-50s - peak earning years - those w/ higher risks go into higher equities 60s - 60/40 portfolio of stocks & bonds 70s+ - asset-allocation decisions completed since retired
how old must you be to have your own credit card w/o a cosigner
21
what consequences can occur if you fail to pay your credit card or loans
30 days late - flexible 60 days late - financial consequences begin - charged a late fee - low red score (can make hard to buy car) 90 days late - shut down & expected to pay full balance
you want a high/low interest rate on a loan
A bank will charge higher interest rates if it thinks there's a lower chance the debt will get repaid. Some types of loans, like credit cards, are always assigned higher interest rates because they are more expensive to manage. ... The higher your score, the lower the interest rate you will have to pay.
bond
A financial security that represents a promise to repay a fixed amount of funds
roth IRA
A personal savings plan; contributions are not tax-deductible; earnings are tax-free
stock
A share of ownership in a corporation.
target date fund
A target date fund (TDF) - also known as a lifecycle, dynamic-risk or age-based fund - is a collective investment scheme, often a mutual fund or a collective trust fund, designed to provide a simple investment solution through a portfolio
what is a credit counselor? how can they help you?
American Consumer Credit Counseling (ACCC) is a nonprofit organization dedicated to providing credit counseling, debt management services, and financial education to consumers nationwide. ... Here are some answers to frequently asked questions about how an ACCC credit counselor can help.
how does your credit score effect the APR's your are offered?
Banks set interest rates (the APR or annual percentage rate) based on the risk you pose. The higher credit risk you appear to be, the higher your interest rate will be. ... On the other hand, if you have a low credit risk (represented by a high credit score), you'll typically qualify for a lower interest rate.
do all companies pay dividends
Dividends are most commonly given quarterly in cash from retained earnings, but they can also come in the form of stock. Companies are not required to pay any dividends at all, but they may choose to give portions of their earnings back to shareholders as an incentive to keep investing in their companies.
what is the range for your FICO credit score
Fair Isaac Corp. produces the credit scoring algorithm used for the majority of lending decisions in the United States. Most FICO scores range from 300 to 850, and the higher the score, the better.
how to read a credit card statement
Included here are the last 4 digits of your account number and the open and closing dates this credit card statement applies to. This section summarizes your transactions for this statement, including your payments and credits, purchases, interest charged, fees charged, balance transfers, and cash advances.
how long do payments show up on your credit report? bankruptcy?
It depends on the type of negative information. Here's the basic breakdown of how long different types of negative information will remain on your credit report: Late payments: 7 years. Bankruptcies: 7 years for completed Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies.
what is the best way to use a credit card to help boost your credit score
Keep balances low on credit cards and other "revolving credit". High outstanding debt can affect a credit score. Pay off debt rather than moving it around. The most effective way to improve your credit scores in this area is by paying down your revolving (credit cards) debt.
what is the easiest / best way to improve your credit score
Keep balances low on credit cards and other "revolving credit". High outstanding debt can affect a credit score. Pay off debt rather than moving it around. The most effective way to improve your credit scores in this area is by paying down your revolving (credit cards) debt.
what is the relationship between risk and return
Low levels of uncertainty or risk are associated with low potential returns, whereas high levels of uncertainty or risk are associated with high potential returns. According to the risk-return tradeoff, invested money can render higher profits only if the investor is willing to accept the possibility of losses.
what is an ideal FICO credit score range
One of the most well-known types of credit score are FICO Scores, created by the Fair Isaac Corporation. FICO Scores are used by many lenders, and often range from 300 to 850. A FICO Score above 670 is considered a good credit score on these models, and a score above 800 is usually perceived to be exceptional.
passively managed fund
Passively managed fund is a fund whose investment securities are not chosen by a portfolio manager, but instead are automatically selected to match an index or part of the market. This is the opposite of an actively managed fund. An S&P 500 index fund is a passively managed fund that mimics the S&P 500 index.
what are referred to as "predatory lending" and why
Predatory lending is the unfair, deceptive, or fraudulent practices of some lenders during the loan origination process.
what influences a company's stock price
Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless. 3. Theoretically earnings are what affect investors' valuation of a company, but there are other indicators that investors use to predict stock price.
advantages of investing
Put more simply this is the power of the time value of money. Regular investments in an investment portfolio or a retirement account can lead to huge compounding benefits. Improves spending habits - This benefit is generally overlooked by many, but investing early on definitely helps develop positive spending habits.
advantages of savings
Savings Account Advantages. Savings accounts are ideal for individuals looking to save while earning a modest amount of interest. ... Much like checking accounts, many saving accounts are also insured by the FDIC. Other advantages include the ability to have automatic deductions for bill-pay and minimal monthly fees.
who do you contact when you find an error on your credit card
The federal Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information in the files of the nation's credit reporting companies.
how does the term length effect the payment?
The period of time during which a fixed-income security, investment, or agreement is in force. For example, term life insurance lasts only for a certain number of years. The exact number of years is called the term.
what are things that appear on a credit report
These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bankcard, auto loan, mortgage, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.
when should you begin establishing credit
You can start building your child's credit today. You can begin building your child's credit whenever you want to by making him or her an authorized user on your credit card. Usually, you have to be at least 18 to take on a credit card or loan, which are the conventional ways that people start building credit.
debit card
a card used to withdraw or deduct money from your checking account
mutual fund
a regulated investment company with a pool of assets that regularly sells and redeems its shares
what is the website where you can check your free credit report
annualcreditreport.com
adjustable rate
has a interest rate that increase or decreases during the life of the loan
compound interest
interest earned on both the principal amount and any interest already earned
simple interest
interest paid on the principal alone
mutual funds
investments that reduce risk to shareholders by investing in many different stocks
secured loans
loans backed by collateral that the bank can claim if the borrowers do not repay them
unsecured loans
loans backed only by the borrowers' good reputation and previous credit rating
actively managed fund
mutual fund that picks stocks based on analysts' research
index funds
mutual funds that mirror the composition of a particular market or index
when you are young, should you invest in more stocks, bonds, or savings accounts
stocks
credit card
type of card issued by a bank that allows users to finance a purchase
