Investment Vocab Flashcard

Front

What is a stock?

Back

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

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What does it mean to sell shares at a profit?

Back

Selling shares at a profit means that the selling price is higher than the purchase price, resulting in a financial gain.

Front

What is a Roth IRA?

Back

A Roth IRA is a type of retirement account that allows individuals to invest post-tax income, with tax-free withdrawals in retirement.

Front

What is a pension?

Back

A pension is a retirement plan that provides a fixed sum of money to an employee after they retire, typically funded by the employer.

Front

What is a 401k?

Back

A 401k is a tax-advantaged retirement savings plan offered by an employer that allows employees to save and invest a portion of their paycheck before taxes are taken out.

Front

What is a 403b?

Back

A 403b is a retirement savings plan for certain employees of public schools and tax-exempt organizations, allowing tax-deferred contributions.

Front

What does 'rate of return' mean?

Back

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

Front

What is considered a bad investment?

Back

An investment is considered bad if the rate of return is lower than the expected rate, such as below 3%.

Front

What is a mutual fund?

Back

A mutual fund is an investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Front

What is the difference between a stock and a bond?

Back

A stock represents ownership in a company, while a bond is a loan made to a company or government that pays interest over time.