Savings and investing vocab

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The amount of money paid or earned for the use of money.

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Simple interest is the amount of money paid or earned for the use of money, calculated as a percentage of the principal amount.

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An account for unexpected expenses such as car breakdowns or surgeries.

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An emergency fund is a savings account set aside for unplanned expenses or emergencies.

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Shares in a company representing part ownership in that company.

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Stocks are shares that represent ownership in a company, allowing investors to benefit from the company's profits.

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401K is a work-sponsored...

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

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Taking a certain amount of money you earn monthly and putting it into savings as a discipline.

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The 'pay yourself first' rule is a personal finance strategy where you prioritize saving a portion of your income before spending on other expenses.

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A financial instrument that represents a loan made by an investor to a borrower.

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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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The percentage of profit earned on an investment over a specific period.

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The rate of return is the gain or loss made on an investment relative to the amount invested, expressed as a percentage.

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A savings account that offers a higher interest rate than a regular savings account, often requiring a higher minimum balance.

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A high-yield savings account is a type of savings account that offers a higher interest rate to encourage saving.

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A financial plan that outlines an individual's savings and investment goals.

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A budget is a financial plan that helps individuals manage their income and expenses to achieve their financial goals.

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The practice of spreading investments across various financial assets to reduce risk.

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Diversification is an investment strategy that involves spreading investments across different assets to minimize risk.