Econ Unit 4

401 k

A 401(k) plan is a qualified employer-established plan to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis.

403 b

A 403(b) plan is a retirement plan for specific employees of public schools, tax-exempt organizations and certain ministers. These plans can invest in either annuities or mutual funds. A 403(b) plan is another name for a tax-sheltered annuity (TSA) plan.

keogh plan

A Keogh plan is a tax-deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan, although most plans are defined as contributions.

investment strategy

In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics and strategies appropriate.

social security

a federal government program that provides retirement, survivor's, and disability benefits funded by a tax on income

annual percentage yield APY

a finance charge, or the cost of credit, expressed as an annual rate

annuity

a fixed sum of money paid to someone each year, typically for the rest of their life.

treasury bills

a government bond with a maturity date of 26 weeks or less

heirs

a person legally entitled to the property or rank of another on that person's death.

executor

a person or institution appointed by a testator to carry out the terms of their will.

intestate

a person who has died without having made a will.

decedent

a person who has died.

individual retirement account

a personal savings plan that allows you to set aside money for retirement

pension

a regular payment made during a person's retirement from an investment fund to which that person or their employer has contributed during their working life.

inheritance

a thing that is inherited.

fiduciary

a trustee

liquidity

ability to convert an asset into cash quickly

Roth IRA

an individual retirement plan that bears many similarities to the traditional IRA, but contribution are not tax deductible and qualifies distributions are tax free

portfolio

collection of information and documents; an investment portfolio is all the investments and accounts you own

prospectus

investment report

trusts

legal arrangement that gives a person- or group of people- the right to hold and manage specific assets; also an illegal grouping of companies that discourages competion

will

legal document providing instructions on how to distribute a person's assets after death

living wills

legal document that provides detailed information about a person's wishes regarding medical procedures for end of life care

beneficiary

person who collects the money if there is a claim on an insurance policy

rate of return

refers to the return stated as a percentage of the total amount invested

retirement

the action or fact of leaving one's job and ceasing to work.

investment

the action or process of investing money for profit or material result.

yield

the annual rate of return on a bond if the bond is held until it matures

power of attorney

the authority to act for another person in specified or all legal or financial matters.

risk

the chance of losing something; also, the measurable likelihood of loss or less than expected return

financial security

the comfort and peace of mind you have knowing there is money available when you need it

return

the money an investor receives above and beyond the sum initially invested

probate

the official proving of a will.

estate planning

the process of anticipating and arranging for the disposal of assets after death

diversification

the strategy of spreading out investments to reduce risk