Investing/Retirement Flashcard3

Front

What is a bond?

Back

A bond is a loan you give to an organization, where you receive interest in return.

Front

What is a stock?

Back

A stock represents partial ownership in a company.

Front

What penalty might you face for early withdrawal from a Certificate of Deposit?

Back

You may face a withdrawal fee.

Front

What is Social Security?

Back

Social Security is a government program that provides financial support to individuals at retirement age.

Front

What is compound interest?

Back

Compound interest is money earned on both the initial principal and the interest that has been added to it.

Front

What does 'rate of return' mean in investments?

Back

Rate of return refers to the gain or loss on an investment over a specified period.

Front

What is the difference between a Traditional IRA and a Roth IRA?

Back

A Traditional IRA allows tax-deductible contributions, while a Roth IRA allows tax-free withdrawals in retirement.

Front

What is the purpose of a pension plan?

Back

A pension plan provides retirement income to employees based on their earnings and years of service.

Front

What is the significance of diversification in investing?

Back

Diversification reduces risk by spreading investments across various assets.

Front

What is an index fund?

Back

An index fund is a type of mutual fund that aims to replicate the performance of a specific index.