Investment Vocab Flashcard

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What is a stock?

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A stock represents ownership in a company and constitutes a claim on part of the company’s assets and earnings.

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What is a bond?

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A bond is a fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.

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What is real estate investment?

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Real estate investment involves purchasing property to generate income or capital appreciation.

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What are mutual funds?

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Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.

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What is a 401k?

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A 401k is a retirement savings plan sponsored by an employer that allows employees to save a portion of their paycheck before taxes are taken out.

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What is a Roth IRA?

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A Roth IRA is an individual retirement account that allows qualified withdrawals on a tax-free basis, provided certain conditions are met.

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What does 'interest earned' mean?

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Interest earned is the income generated from an investment, typically expressed as a percentage of the principal amount.

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What is the significance of 'withdrawals' in investment accounts?

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Withdrawals refer to the act of taking money out of an investment account, which may have tax implications depending on the account type.

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What is the impact of taking Social Security benefits early?

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Taking Social Security benefits at age 62 results in reduced monthly benefits compared to waiting until full retirement age.

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What is capital appreciation?

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Capital appreciation is the increase in the value of an asset over time, which can result in a profit when the asset is sold.