Financial Management Review Cards Chapter 8
Terms in this set (84)
Putting your money somewhere so it can grow.
Pool of money managed by an investment company and invested in multiple companies
Aggressive Growth Mutual Fund (Small Cap)
Growth and Income Mutual Fund (Large Cap)
Large, Well established companies
International Mutual Fund
Fund that contains international or overseas companies
Growth Stock Mutual Fund (Mid-Cap)
Past history of investments
Piece of ownership in a company.
Individual piece of ownership in a company.
Distribution of a portion of a companies earnings
When you make money on an investment.
A list of your investments
The chance of your investments to lose money.
As the risk goes up, the potential return goes up
Putting your money in several investments.
Availability of money
Rental Real Estate
Buying real estate to rent out as an investment
A loan to a company or government
% paid to you on a loan
Safe at the bank.
Certificate of Deposit
Saving account with an insurance company.
Corn, Wheat, copper, oil, and gold
Buying something, betting on price of it in the future.
Contribution limit for a 401(k)
Contribution limit for a Roth IRA.
Contribution limit for a IRA.
Risk on a money market account
Return on a money market account
How does a money market account work?
An account at a bank which offers features just like both a savings account and a checking account.
Advantage of a money market account.
Safe, FDIC Insurance
Disadvantage of a money market account
Doesn't earn much money
Risk on single stocks
Return on single stocks
How does single stocks work?
Share of ownership in one company.
Advantage of single stocks
Easy to track. Only one company
Disadvantage of single stocks
high risk, not diverse, you do all of the research work.
Risk on bonds
Return on bonds
How do bonds work?
Loans to companies, they pay you back with interest
Advantage of bonds
U.S treasury bonds are seen patriotic; better rates than a C.D.
Disadvantage of bonds
inflation, interest rates vary
Risk on mutual funds
Return on mutual funds
10-12% medium to high
How do mutual funds work?
Investors pool their money and fund managers invest the money into 90-200 companies.
Advantage of mutual funds
Professional managers buy/sell, diversification, easy to invest in.
Disadvantage of mutual funds
long term investment
Risk on rental real estate
Return on rental real estate
depends on the market.
How does rental real estate work?
Buy property for rent, make money for renters.
Advantage of rental real estate.
good, long term investment
Disadvantage of rental real estate.
Need a lot of cash, have to find good renters, least liquid type of investments
Risk on annuities
Return on annuities
low return if fixed, higher return if variable.
How does annuities work?
Savings account with an insurance company
Advantage of annuities.
Variable annuities are invested in mutual funds growing tax deferred; some guarantee your principal.
Disadvantage of annuities
Money is locked in the account, interest earned is lower than investing in the stock market.
401(k) Before or after tax.
401(k) Employer Match?
401(k) Whose $ is it?
401(k) Age for withdrawals.
59.5 with no penalty
401(k) Early withdrawals penalty
10% of amount taken out
401(k) retirement withdrawals taxed.
401(k) rollover when leaving employment
403b Before or after tax?
403b employer match
Yes there can be but not likely
403b maximum contribution amount per year.
403b Age for withdrawals
403b Early withdrawal penalty
10% of amount taken out.
403b Retirement withdrawals taxed?
403b Rollover when leaving employment
IRA Before or after tax?
IRA employer match?
IRA early withdrawal penalty.
10% taken out.
IRA Retirement withdrawals taxed.
IRA Rollover when leaving employment
Roth IRA Before or after taxes?
Roth IRA Where?
Roth IRA Employer match?
Roth IRA Age for withdrawals
Contributions can be taken out whenever you want.
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