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Unit 4 Vocabulary RETIREMENT AND INVESTMENT BROWN
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Financial Security- the condition of having the resources to support a standard of living now and in the foreseeable future.
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Social Security: A federal system program in which the government provides money to people who are unable to work because they are old, disabled, or unemployed
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Retirement- the point in time when a person chooses to leave the workforce permanently, usually at age 65 or older
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Individual Retirement Account: An individual retirement account (IRA) that allows individuals to direct pretax income, up to specific annual limits, toward investments that can grow tax-deferred
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Roth IRA: an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax- free.
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Pension: money paid to an employee by the employer from a specific, employer-funded (and in some cases partially employee funded) retirement investment fund after retirement or separation from service before retirement.
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Keogh Plan: A tax deferred retirement plan available to self-employed individuals and their employees for retirement purposes
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Annuity: a fixed amount of money that is paid to someone each year
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401(k): a retirement investment plan that allows an employee to invest a percentage of their wages into a tax-deferred account chosen by the employer
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403 (b) - a retirement plan offered to employees of tax-exempt or non-profit organizations
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Risk-The uncertainty of a return and the potential for financial loss
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Investment- Assets purchased with the goal of providing additional income from the asset itself but with the risk of loss
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Liquidity- The ability to convert an asset to cash quickly
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Yield- The percentage of increase in the value of your savings due to earned interest
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Annual percentage yield (APY) - The published annual rate of return on an investment/savings account
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Investment Strategy- An investor's plan of attack to guide their investment decisions based on individual goals, risk tolerance and future needs for capital
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Diversification: the strategy of spreading out investments to reduce risk
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Portfolio- a collection of financial assets
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Prospectus- an investment report that provides information to potential investors
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Return- the money an investor receives above and beyond the sum of money initially invested
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Rate of Return-Total return on investment expressed as a percentage of the amount of money saved
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Living Wills- A plan to care for someone who is young or incapacitated and cannot care for themselves
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Executor- Individual who executes a contract. Commonly used as the term to define the person who carries out a will
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Decedent- legal term used for someone who has died
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Beneficiary-refers to someone who is eligible to receive distributions from a trust, will or life insurance policy
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Testator- A person who makes a will
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Fiduciary-A person to whom property or power is entrusted for the benefit of another
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Intestate- Dying without a will
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Power of Attorney-A legal document authorizing someone to act on your behalf
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Trusts- A legal document in which an individual (the trustor) gives someone else (the trustee) control of property, for ultimate distribution to another person (the beneficiary).
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Will- A legal document that tells how you want your estate to be distributed after your death
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Estate Planning- Is the process of planning for the administration and transfer of property during one’s lifetime or at one’s death.
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Probate- A court process that validates a will.
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Heirs- People entitled to receive the property or assets from another person who has died
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Inheritance- All or part of the estate of a decedent
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