Presentation on theme: "Vocabulary. Section 9.1 Vocabulary Pre-tax dollars: Deposit into a retirement account before taxes have been taken out of your paycheck. This lowers your."— Presentation transcript:
Section 9.1 Vocabulary Pre-tax dollars: Deposit into a retirement account before taxes have been taken out of your paycheck. This lowers your taxable income (you pay less income tax) Example: 401(k) After tax investments: Money deposited into an account after taxes have been taken out of your paycheck. Example: IRA Tax exempt: free from paying tax Example: Roth IRA
Vocabulary 9.1 IRA (Individual Retirement Account) = An account that is opened to save for retirement Types of IRAs: Traditional IRAs grow tax deferred (pay taxes later) Money is invested in stocks, bonds, mutual funds, and cash
9.1 Vocabulary 401K Retirement plan where employers match your contributions or a part of your contribution. Uses pre-tax dollars (reduces your taxable income) – money is contributed from your paycheck before income taxes are calculated Money is invested in stocks, bonds, mutual funds, and cash.
9.1 Vocabulary Stocks = ownership of a company Stocks are sold in shares Make money by buying at a low price & selling at a high price or by getting dividends Use a broker or financial advisor to help invest
9.1 Vocabulary Mutual Funds Your money is pooled with other investors’ money A fund includes a group of stocks, bonds, or cash investments and this is where your money is invested
9.1 Vocabulary Pension = retirement plan provided by the employer. Can be a fixed amount of money you get at retirement or profit sharing