Investing: Vocabulary 2

Compound Return

• The initial amount of money invested without any interest.

• The growth of an investment where earnings, such as dividends or interest, are reinvested to generate additional earnings over time.

• The total amount of money earned from an investment without reinvestment.

• The process of withdrawing earnings from an investment instead of reinvesting them.

Traditional IRA

• An individual retirement account that allows a person to set aside pre-tax income up to a specified amount each year

• A type of savings account that offers tax-free growth and tax-free withdrawals in retirement

• A retirement plan that allows employees to save a portion of their paycheck before taxes are taken out

• A government-sponsored retirement plan that requires mandatory contributions from employees

Inflation

• The rate at which the price of goods increases and consumer purchasing power decreases over time.

• A measure of the total value of goods and services produced in a country.

• The process of reducing the money supply to stabilize the economy.

• An increase in the value of currency leading to lower prices.

Rate Of Return

• The total profit from an investment without considering the initial amount invested.

• The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)

• The percentage of an investment that is lost over time due to market fluctuations.

• The amount of money invested in a project without any returns.

Purchasing Power

• The ability to borrow money from banks.

• The number of goods and services that money can buy.

• The total amount of money in circulation.

• The interest rate set by the central bank.

New York Stock Exchange (NYSE)

• The world's largest stock exchange, physically located in New York City

• A major stock exchange located in London

• A stock exchange primarily for technology companies

• The largest stock exchange in Asia

Traditional 401(k) Plan

• A retirement savings plan that allows individuals to save for retirement and have the savings grow while deferring taxes until funds are withdrawn

• A type of savings account that offers high interest rates for short-term savings

• A government-sponsored program that provides free money for retirement

• A loan program for purchasing a home that requires no down payment

Investing

• The act of spending money on immediate consumption.

• The process of setting money aside to increase wealth over time for long-term financial goals such as retirement.

• A method of gambling to increase wealth quickly.

• The practice of saving money without any specific goals.

Stock

• A type of bond issued by a company

• A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company

• A loan taken by a company from the bank

• A form of currency used in trading

Shareholder

• A person, company, or institution that owns at least one share in a company

• A person who manages a company's operations

• An individual who invests in bonds

• A company that provides loans to shareholders