Chapter 10- personal finance
What are examples of long term goals
Education(college), Buying a house, Providing for a family, Finanical security, Retirement planning
What is the difference between saving and investing?
Saving is accumulating money for future needs and investing is attempting to make your money grow
Stocks
Shares of ownership in a corporation
Investment Portfolio
a collection of assets such as certificates of deposit, stocks, bonds, real estate and other holdings that lower risk over time
Bond
a debt instrument that is issued by a corporation or government
Liquidity
a measure of the ability to turn an asset into cash quickly
Dollar-Cost averaging
a person invests the same amount of money on a regular basis, such as monthly
Systematic Saving and Investing
a strategy for regularly setting aside cash that can be used to achieve goals; long term focus
How does principal grow?
additional deposits in the account and interested earned
Emergency Fund
amount of money you set aside for unplanned emergencies
Contingencies
emergencies or other unplanned events
Tax-Defferred
investments have no tax on gains until the money is taken from the account
Market timing
investors choose timing principles to follow; when to buy and when to sell
Diversification
means holding a variety of investments to reduce risk
Bear Market
prices are steadily decreasing
Bull Market
prices are steadily increasing
Price Grouping
raising prices an unfair amount in times of emergencies or crisis
Market
refers to any place where investments are bought and sold
Financial Security
the ability to prepare for future needs and meet current expenses to live comfortably
Return on Investment
the amount that money saved or invested grows
Stock Risk
the chance that activities or events that affect a company will change the value of an investment
Industry Risk
the chance that factors that affect an industry as a whole will change the value of an investment
Inflation Risk
the chance that the rate of inflation will be higher than the rate of return on an investment
Investment Risk
the potential for change in the value of an investment