NGPF-Investing Unit Terminology
portfolio
A collection of financial assets
401K
A retirement account offered through an employer, where an employee can contribute money from his or her paycheck before or after taxes.
brokerage account
An account that lets individual investors to trade stocks, bonds, mutual funds, etc.
capital gains
The positive difference between the purchase price of a stock and its sale price.
investing
The process of setting money aside to increase wealth over time for long-term financial goals such as retirement
bonds
a certificate issued by a government or private company which promises to pay back a loan with interest the money borrowed from the buyer of the certificate
stock exchange
a market for buying and selling stock
broker
a person who is paid to buy and sell for someone else
financial planner
a professional consultant who provides financial advice for a fee or commission
pension
a sum paid regularly to a person, usually after retirement
things to consider when picking a financial planner
fees experience credibility history of success
risk tolerance
how comfortable you are with the ups and downs of investing
profit sharing
incentive pay in which payments are a percentage of the organization's income and do not become part of the employees' base salary
what a bond holder receives
interest
compound interest
interest earned on both the principal amount and any interest already earned
simple interest
interest paid on the principal alone
tips for first time investors
keep investments diverse don't be too risky keep money invested for a long period of time
reasons to put money in a savings account
low risk emergency fund
S&P 500
market index of U.S. equities based on the performance of 500 large-cap stocks representing various sectors of the overall equities market
savings
money put aside for future use; growing your money is not the top objective
dividends
payments of cash from a corporation to its stockholders
factors to consider when picking a target date fund
retirement date investment preferences-risky or conservative
stocks
securities that represent part ownership or equity in a corporation
risk of purchasing stocks
stock prices may drop
factors that impact stock prices
supply demand news and anticipated news about a company
risk and return relationship
the higher the risk, the higher the return the lower the risk, the lower the return
mutual fund manager
the person in charge of a pool of shareholders' money invested in an assortment of different securities
asset allocation
the process of spreading your assets among several different types of investments to lessen risk
diversity
variety
reasons why a person would pass on a 401K
company does not match contributions you can not commit to keeping your contributions in the 401K until 59.5
suggested asset allocation
110 - your age =percent of stocks to bonds
401 K matching
company will contribute money into a retirement account depending on how much the employee puts in
mutual funds
an investment program funded by shareholders that trades in diversified holdings and is professionally managed.
shareholder
an owner of shares in a company
two ways to profit from owning stocks
capital gains dividends
