Lesson 12.1

Key Terms

Investing: the process of setting money aside to increase wealth over time for long-term financial goals, such as retirement
Return on Investment (ROI): the measurement of gain or loss generated on an investment relative to the amount of money invested​​​​​​​
Risk-Return Ratio: relationship of expected return (profit you expect to make) compared to the amount of risk (amount you stand to lose if the price goes down) taken with a given investment  ​​​​​​​
Liquid Asset: an asset that can be easily bought or sold

Lesson 12.2

Key Terms

Stock Market: a financial market that trades shares of ownership of public companies
Stock: a security that represents part ownership or equity in a company​​​​​​​
Stock Market Index: a measurement of a section of the stock market, typically a weighted average of the prices of selected stocks
Bull Market: when prices in a financial market are on the rise or expected to rise​​​​​​​
Bear Market: when prices in a financial market experience a prolonged decline​​​​​​​
Fixed Annuity: annuity that offers low, guaranteed rates of interest and fixed income payments in retirement​​​​​​​
Variable Annuity: a type of annuity that can vary in value based on the performance of the mutual funds inside it

Lesson 12.3

Key Terms

Portfolio: a list of your investments
Prospectus: a description of the investing strategy the mutual fund management company will use to invest your money​​​​​​​
Individual Retirement Arrangement (IRA): a tax-advantaged investing account that people use to save for retirement
401(k): a qualified retirement savings plan offered by a company to its employees who contribute money from their gross pay​​​​​​​
Qualified Retirement Savings Plan: an employer-sponsored retirement plan that has a special tax treatment

Lesson 12.4

Key Terms

Diversification: the practice of dividing the money a person invests among different types of investments in order to lower risk
Capitalization: the total dollar market value of a company or how much a company is worth

Lesson 12.5

Key Terms

Retirement Planning: the process of figuring out how much money you’ll need in retirement and creating a plan to get there
Dividend: a distribution from the net profits of a company to its shareholders
Estate Planning: preparation of tasks to manage an individual’s assets after death​​​​​​​
Will: a legal document listing how a person wants their assets distributed after their death

Lesson 12.6

Key Term

Charitable Organization: an organization set up to provide help and raise money for those in need