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Financial 411: Your Money Glossary

Asset Class An investment category such as stocks, bonds, cash, or real estate

Bear Market A term used to describe the stock market when securities are expected to fall

Bonds A debt investment in which an investor loans money to an entity (corporate or government) that borrows the funds at a fixed interest rate

Bull Market A term used to describe the stock market when securities are expected to rise

CDs (Certificates of Deposit) A savings certificate issued by your bank for a certain dollar amount that entitles you to interest based on the rate (it also has a predetermined maturity date)

Diversified Portfolio A group of investments in a range of asset classes

Dow Jones Industrial Average An index of the top 30 highest-earning stocks that acts as a benchmark for the overall condition of the stock market

Financial Planner An agent licensed to manage your assets and/or provide investing advice, usually for a fee or for an annual percentage of your wealth

Floating Rate Interest rates that are tied to another interest rate, usually the prime rate or the Treasury Bill rate; when that rate rises or falls, your rate does too

401(k) A contribution plan offered by an employer that allows employees to set aside tax-deferred income for retirement; employers typically offer a matching plan that corresponds with either all or part of the employee’s contribution

High-Yield Savings Account A deposit account opened at your bank where the money you deposit earns greater-than-average interest

Index Fund A mutual fund that invests in stocks listed in a certain index in order to mirror its performance

IRA (Individual Retirement Account) Allows you to set aside and invest a fixed amount of money on a yearly basis; the earnings are tax-deferred until they're withdrawn at retirement

Mutual Fund A fund that many shareholders invest in managed by an investment company; it uses the money from selling shares to the public to invest in a range of stocks and bonds

S&P 500 An index of the 500 largest US stocks that's used as a benchmark for mutual funds to compare investment returns

Stockbroker An agent licensed to buy and sell stock on your behalf while earning a commission on the trades

Stock Mutual Funds A mutual fund that invests primarily in stocks

-- The Nest Editors

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