Economic and Financial Concepts

Risk Return Tradeoff

• The higher the risk, the higher return you might earn

• Risk and return are unrelated

• Higher risk guarantees higher returns

• Lower risk always results in lower returns

John Maynard Keynes

• Economist in favor of strong government intervention in economy

• Philosopher advocating for minimal government involvement

• Political theorist supporting free-market capitalism

• Sociologist focused on social welfare programs

Personal Budget

• Last category to consider is Entertainment and Joy

• First category to consider is Housing

• Second category to consider is Transportation

• Third category to consider is Food

Age Rule for investing

• You should hold a percentage of stocks that is equal to 100 minus your age.

• You should invest all your money in stocks regardless of your age.

• You should hold a percentage of bonds that is equal to your age.

• You should only invest in stocks if you are under 30.

Grants

• Free money to pay for college (don’t have to pay back)

• Loans that must be repaid with interest

• Scholarships based on academic performance

• Work-study programs that require part-time employment

Credit Union advantages

• Pay higher rates on customer accounts

• Charge higher fees

• Charge higher rates in interest loans

• Provide limited service

Real GDP per Capital

• Most accurate measurement for standard of living.

• A measure of total economic output.

• An indicator of income inequality.

• A calculation of government spending.

Common fees for checking accounts

• Overdraft

• Monthly Maintenance Fee

• Foreign Transaction Fee

• Minimum Balance Fee

Roth Individual Retirement Account

• Retirement account subject to income tax

• Tax-free savings account for retirement

• Investment account with no tax benefits

• Account for short-term savings goals

GDP subtraction

• Exports + imports

• Exports – imports

• Exports * imports

• Exports / imports