1. Investing in Your Future Vocabulary
Personal Finance
Chapter 11

2. Investing in Your Future
The use of savings to earn a financial return

3. Investing for Your Future
Inflation
A rise in general level of prices

4. Investing for Your Future
Rule of 72
Technique for estimating the number of years required to double your money at a given rate of return

5. Investing for Your Future
Risk
The chance that an investment’s value will decrease

6. Investing for Your Future
Diversification
An investment strategy for spreading risk among different types of investments

7. Investing for Your Future
Financial advisers
Professional investment planners who are trained to give investment advice

8. Investing for Your Future
Annual report
An SEC-required summary of a corporation’s financial results for the year and prospects for the future

9. Investing for Your Future
Bonds
An investment that represents the debt of a company or a government

10. Investing for Your Future
Discount bond
A bond purchased for less than its maturity value

11. Investing for Your Future
Mutual fund
A professionally managed group of investments bought using a pool of money from many investors

12. Investing for Your Future
Annuity
A contract sold by an insurance company that provides the investor a series of regular payments, usually after retirement

13. Investing for Your Future
Stock
A unit of ownership in a corporation

14. Investing for Your Future
Futures
Contracts to buy and sell commodities or stocks for a specified price on a specified date in the future

15. Investing for Your Future
Option
The right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period

16. Investing for Your Future
Penny stocks
Low-priced stocks of small companies that have no track record

17. Investing for Your Future
Transition

18. Investing for Your Future
A bond purchased for less than its maturity value.
Annuity
Discount bond
Diversification
Investing

19. Investing for Your Future
A contract sold by an insurance company that provides the investor a series of regular payments, usually after retirement.
Annuity
Discount bond
Diversification
Investing

20. Investing for Your Future
An investment strategy for spreading risk among different types of investments.
Annuity
Discount bond
Diversification
Investing

21. Investing for Your Future
The use of savings to earn a financial return.
Annuity
Discount bond
Diversification
Investing

22. Investing for Your Future
A rise in the general level of prices.
Annuity
Bonds
Inflation
Rule of 72

23. Investing for Your Future
If Ricardo invested $1000 at a 5 percent average return, how many years would it take for his investment to be worth $2000?

24. Investing for Your Future
Transition

25. Investing for Your Future
The chance that an investment’s value will decrease.
Annuity
Financial advisers
Risk
Stock

26. Investing for Your Future
An SEC-required summary of a corporation’s financial results for the year and the prospects for the future.
Annuity
Financial advisers
Risk
Stock

27. Investing for Your Future
A unit of ownership in a corporation.
Annuity
Financial advisers
Risk
Stock

28. Investing for Your Future
Professional investment planners who are trained to give investment advice.
Annuity
Financial advisers
Risk
Stock

29. Investing for Your Future
An investment that represents the debt of a company or a government.
Annuity
Bonds
Rule of 72
Stock

30. Investing for Your Future
Michael Johnson would like to invest in XYZ Corporation. He heard that the company is big and powerful. You’ve never heard of it.
What kinds of information should he have before he invests in this company?
Where can he get that information?

31. Investing for Your Future
Transition

32. Investing for Your Future
A professional investment managed group of investments bought using a pool of money from many investors.
Futures
Mutual funds
Option
Penny stocks

33. Investing for Your Future
Contracts to buy and sell commodities or stocks for a specified price on a specified date in the future.
Futures
Mutual funds
Option
Penny stocks

34. Investing for Your Future
The right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period.
Futures
Mutual funds
Option
Penny stocks

35. Investing for Your Future
Low-priced stocks of small companies that have no track record.
Futures
Mutual funds
Option
Penny stocks

36. Investing for Your Future
Technique for estimating the number of years required to double your money at a given rate of return.
Mutual funds
Option
Penny stocks
Rule of 72

37. Investing for Your Future
Friends of your family, who were recently married, are now finding that they have money left over each month that they could invest. They would like to consult a financial adviser but don’t know one.
What tips would you give them about selecting a financial adviser?

38. Investing for Your Future
Friends of your family, who were recently married, are now finding that they have money left over each month that they could invest. They would like to consult a financial adviser but don’t know one.
What tips would you give them about selecting a financial adviser?

39. Investing for Your Future
Kim Possible would like to invest $10,000 she inherited from her uncle. She would like to have the money for her daughter's college education starting in eight years. She does not like to take a lot of risk because she cannot afford to lose $10,000.
What course of action would you suggest for Kim?

40. Investing for Your Future
Assume that Kim Possible invested her $10,000 in a way that earned an average of 6 percent annual return. Assume that college will cost $5,000 a year for four years.
College planner tool