Unit 3: Investing and Budgeting

diversification

to diversify your investment portfolio so you are not relying on the success of one company

utilities

water, gas, electric

how does inflation affect investing

-rise in general prices -stock market historical has a higher return than the rate on inflation

gross pay

amount of money before taxes have be taken out

wages

amount of money paid to an employee at a specified rate per hour worked. If you work more hours, you will be paid more

mutual fund

collection of stocks/bonds, typically chosen and actively managed by an "expert" in exchange for a fee from each investor

bound

debt security in which the company or government owes the investor a debt, least riskiest

ways to cut costs

if you have a deficit and cut your expenses on movie channels you're making is cheaper

IRA roth

individual retirement account is an investment option for any young person entering the full time workforce

basics of budgeting

keeping you expenses less than your income so you have a surplus

net pay

money left over after taxes have been taken out

deficient

negative number

discretionary spending

optional spending on your wants, as opposed to need

stockholder

people who purchase stock

surplus

positive number

pension

retirement account that a employer maints to give an employee a fixed payout at retirement

401K

retirement savings plan sponsored by an employer which lets workers save and invest some of their paycheck. Your employer is going to match your contributions

salary

set amount of money paid to an employee for a set period of time worked. You paid the same no matter how many hours you work

stock

share of stock represents a fractional ownership of a company, which an individual buys in hopes of earning money and a company issues in order to raise funds, riskiest type of investment