Investing/Retirement Flashcard3

Front

What is a Certificate of Deposit (CD)?

Back

A CD is a savings product offered by banks that provides a fixed interest rate for a specified term, with penalties for early withdrawal.

Front

What is the penalty for withdrawing money from a CD before the term ends?

Back

Withdrawal fee.

Front

What does ROI stand for in investing?

Back

Return on Investment.

Front

What is the stock market?

Back

A place for buying and selling shares of public companies.

Front

Which investment type typically offers the highest potential return?

Back

Stocks.

Front

What is a Roth IRA?

Back

A retirement account where contributions are made with after-tax dollars, and withdrawals are tax-free in retirement.

Front

What is a Traditional IRA?

Back

A retirement account where contributions may be tax-deductible, but withdrawals are taxed as income.

Front

What is a 401(k) plan?

Back

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

Front

What is a money market fund?

Back

A type of mutual fund that invests in short-term, low-risk securities and aims to provide liquidity and safety.

Front

What is diversification in investing?

Back

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