Asset Allocation The percent of money you should have in stocks, bonds, or cash. Annuity ... Dow Jones. An indicator of
GLOSSARY OF INVESTMENT TERMS Asset Allocation The percent of money you should have in stocks, bonds, or cash. Annuity A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement. Bond A certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date. CD Certificate of Deposit. A certificate from a bank stating that the named party has a specified sum on deposit, usually for a given period of time at a fixed rate of interest. Deflation A decline in general price levels, often caused by a reduction in the supply of money or credit. Dividend A taxable payment declared by a companyʹs board of directors and given to its shareholders out of the companyʹs current or retained earnings, usually quarterly. Dividends are usually given as cash (cash dividend), but they can also take the form of stock (stock dividend) or other property. Dow Jones An indicator of stock market prices; based on the share values of 30 leading companies listed on the New York Stock Exchange Estate Planning The preparation of a plan of administration and disposition of oneʹs property before or after death, including will, trusts, gifts, power of attorney, etc. Equity 1. Ownership interest in a corporation in the form of common stock or preferred stock. 2. Total assets minus total liabilities; here also called shareholderʹs equity or net worth or book value. IRA Individual Retirement Account. A tax‐deferred retirement account for an individual that permits individuals to set aside up to $3,000 per year, with earnings tax‐deferred until withdrawals begin at age 59 1/2 or later (or earlier, with a 10% penalty). Inflation The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. Investment An item of value purchased for income or capital appreciation. Long‐term Seeking to grow the principal value of the account over an extended period of time. Growth Willing to invest in securities that have historically demonstrated a moderate to above average degree of risk to loss of principal. Marginal Tax The level of income tax of a given individual, as indicated by the amount of taxes bracket he/she pays on his/her final dollar of taxable income. Also called tax rate.
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A collection of stock, bond, or money market securities. It is owned by many investors who share common financial goals, and is managed by a professional investment company. National Association of Securities Dealers Automated Quotation. A computerized system established by the NASD to facilitate trading by providing broker/dealers with current bid and ask price quotes on over‐the‐counter stocks and some listed stocks. A point in the stock market simply means the index being measured has moved up or down by that amount. For example, if the NASDAQ is at 1900 and it moves up 10 points, it has increase by 0.53%. (10 points = 0.53% of 1900 total points). Although many of the news services report point moves, they are relatively meaningless. Percentage moves are what counts. A collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices. A type of IRA, established in the Taxpayer Relief Act of 1997, which allows taxpayers, subject to certain income limits, to save for retirement while allowing the savings to grow tax‐free. Standard & Poorʹs 500. A basket of 500 stocks that are considered to be widely held. The S&P 500 index is weighted by market value, and its performance is thought to be representative of the stock market as a whole. Seeking a significant increase in principal value. Willing to accept a great degree of risk by investing un securities that have historically demonstrated a risk of loss of principal value to maximize returns. Represents a share of ownership in a corporation, also referred to as an equity. General term for the organized trading of stocks through exchanges and over‐the‐ counter. Seeking securities that generate income while legally eliminating or reducing taxes.
Some terms adapted from dictionary.com and investorwords.com.
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