Savings And Investing

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Savings

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The portion of current income not spent on consumption,

Putting money away for later use

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Investments/investing

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the purchase of assets with the goal of increasing future income

money that is put in a particular place in order to gain profit

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Risk

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the chance that the value of an investment will decrease

putting money into something with the chance of losing it

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return

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the profit or yield of an investment

a profit from an investment

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liquidity

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the ability of an investment to be converted into cash quickly without loss of value

the availability to liquid assets to a market or a company

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stocks

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an investment that represents ownership in a company or corporation

a type of security that signifies ownership in a coorperation and represents a claim on part of the coorporations assets and earnings

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bonds

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a security representing a loan of money fro a lender to a borrower for a set period of time, which pays a fixed rate of interest

a written or signed contract promising a certain sum of money by a certain date or by a specified fulfillment

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mutual funds

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and investment that pools money from several investors to buy a particular type of investment, such as stocks

an investment program funded by shareholders that trades in diverse funds holdings and is professionally managed

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real estate

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an investor buys a piece of property, such as land or building, in hope of generating profit

properties consisting of lands and/or buildings

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certificate of deposit

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a deposit that earns a fixed interest rate for a specified length of time, the longer the time period, the greater the rate of return; however, there is a substantial penalty for early withdrawal

a saving certificate entitling the bearer to receive interest; certificate of deposits are a way to enjoy higher returns on your money without a lot of risk

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collectibles

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unique items that are relatively rare or highly valued such as art work, baseball trading cards, coins, automobiles, and antiques

an item valued and sought by collectors

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buying on margin

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is where an investor borrows part of the money needed to invest in a stock from a brokerage firm

purchasing an asset by making a down payment and financing the balance amount through a loan by using the asset as the collateral

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short selling

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when an investor sells shares of stock that they do not own with the intent to buy them back later at a lower price

the sale of a security that isn't owned by the seller or that the seller has borrowed

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diversification

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spreading your assets among different types of investments to reduce risk ( not putting all of your eggs in one basket)

to distribute investment among different companies or securities in order to limit losses in the event of a fall in a particular market or industry

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dollar cost averaging

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buying an equal amount of the same stock at equal intervals

the technique of buying a fixed dollar amount of a particular investment on a regular schedule regardless of the shared price

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buy and hold technique

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where an investor buys stock and holds onto it for a number of years

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regulatory pyramid

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a network of safeguards that surround the securities industry-brokerages all the way up to the US Congress

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Prospectus

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A formal written offer to sell securities that sets forth a plan for a proposed business enterprise. A prospectus should contain the facts that an investor needs to make a informed decision.

a document that describes the major features of a business to investors, clients, or buyers

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Annual Report

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a document detailing the business activity of a company over the previous year, and containing an income statement, cash flow statement, and balance sheet.

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Compounding Interest

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Earning interest on interest.

when you take out a loan, interest is calculated for the first period, the interest is added to the original total, interest for the next period is calculated but based on gross figure from first period

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Fixed Interest Rate

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The interest rate will not change for the lifetime of the investment.

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Inflation

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Steady rise in the general level of prices. Occurs when the supply of money rises faster than the supply of goods and services available for purchase,

when prices get higher or it takes more money to buy the same items

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Interest

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price of money.

a change for borrowed money with a percentage of the amount added paid in certain intervals

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Interest Rate

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Percentage rate paid on the money saved or invested expressed as an annual percentage rate.

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Principal

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The original amount invested, borrowed, or saved.

amount borrowed or amount still owed on a loan, separate from interest

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Simple Interest

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Interest earned on the principal (original) investment.

SI= P x I x N

simple interest= loan amount x interest rate x duration of loan by period

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Time Value of Money

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A calculations which adjust for the fact that dollars to be received or paid out in the future are not equivalent to those received or paid out today because of compounding interest.

the idea that money available at the present time is worth more than the same amount in the future due to earnings