Saving and Investing Review

Defined contribution retirement account that is taken out of your paycheck before you pay any taxes on this income.

• IRA
• Roth IRA
• 401K
• Pension

An account that pays interest on a specific sum of money that a person has deposited for a specific period of time. If withdrawn before that time,the bank imposes a penalty fee.

• Savings Account
• Certificate of Deposit (CD)
• Checking Account
• Money Market Account

Interest paid periodically and paid on the principal plus interest earned.

• Simple Interest
• Compound Interest
• Hard Interest
• Double Interest

The percentage rate that is used when calculating the interest (money) paid on a savings, money market, or investment account.

• Rule of 72
• Interest rate
• Simple Interest
• Rate of Return

Money paid to you by a financial institution when you deposit funds there.

• Allowance
• Income
• Interest
• Tips

Act of purchasing assets (stocks, bonds, property) with expectation that they will increase in value over time.

• Withdrawing
• Depositing
• Time Value of Money
• Investing

Retirement account that allows investors to make tax-deductible contributions. Individuals are responsible for setting up and managing the account.

• 401K
• IRA
• 403B
• Social Security

A type of bank account where the bank invests the money in government and corporate securities in order to pay a higher interest rate than a regular savings account. You typically have to have a large minimum balance in order to have such an account.

• Savings Account
• Money market account
• Checking Account
• CD

Refers to the likelihood that an investment will decrease in value.

• Chance
• Gamble
• Stake
• Risk

A portion of your income that you do not spend on your current needs, but instead set aside for future needs.

• Collateral
• Discretionary Income
• Savings
• Net Worth