Personal Investing Flashcards

Personal Investing Flashcards
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Mutual Fund Diversification
This strategy allows individuals to make investments that have various characteristics and levels of risk; this serves to minimize losses.
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Mutual Fund
Investment companies manage these funds that typically feature diversified portfolios.
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Financial statements used to calculate earnings per share

Income statement

Balance sheet

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Earnings Per Share (EPS)
Shareholders can look at this to find out how much money their shares of stock contributed to the company they invested in.
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Disadvantages of equity-indexed annuities

Market value increases don't directly transfer to the account

Costs and fees associated with all annuities

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Disadvantages of fixed-rate annuities

Payouts are taxed at retirement

Investors can't increase their funds when the market increases

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Variable-Rate Annuity
Aggressive investors are typically interested in these investments, which are characterized by fluctuating interest rates.
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Equity-Indexed Annuity
A type of annuity that moderate investors generally select. These annuities have a guaranteed minimum return along with a chance that earnings will reflect positive changes in the market.
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Correlation between risk and return in annuities
These two factors are linked when dealing with annuities. It one is higher the other will be high as well, if one is low, both will be low.
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Deferred Annuity
People who are still far away from retirement can pursue this kind of annuity, which requires payments over five years and then serves as income after retirement.
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Fixed-Rate Annuity
These investments have a set interest rate that never changes. Typically, conservative investors prefer these investments.
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Immediate Annuity
The kind of annuity most useful for someone close to retirement. You pay an initial investment and can begin to receive payments immediately.
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25 cards in set

Flashcard Content Overview

You'll be able to review both immediate and deferred annuities with these flashcards. Fixed-rate, variable-rate and equity-indexed annuities will also be covered. You can find cards that go over stocks, index funds and exchange traded funds. Additionally, these cards focus on bonds, including municipal bonds and treasury bonds.

Front
Back
Immediate Annuity
The kind of annuity most useful for someone close to retirement. You pay an initial investment and can begin to receive payments immediately.
Fixed-Rate Annuity
These investments have a set interest rate that never changes. Typically, conservative investors prefer these investments.
Deferred Annuity
People who are still far away from retirement can pursue this kind of annuity, which requires payments over five years and then serves as income after retirement.
Correlation between risk and return in annuities
These two factors are linked when dealing with annuities. It one is higher the other will be high as well, if one is low, both will be low.
Equity-Indexed Annuity
A type of annuity that moderate investors generally select. These annuities have a guaranteed minimum return along with a chance that earnings will reflect positive changes in the market.
Variable-Rate Annuity
Aggressive investors are typically interested in these investments, which are characterized by fluctuating interest rates.
Disadvantages of fixed-rate annuities

Payouts are taxed at retirement

Investors can't increase their funds when the market increases

Disadvantages of equity-indexed annuities

Market value increases don't directly transfer to the account

Costs and fees associated with all annuities

Earnings Per Share (EPS)
Shareholders can look at this to find out how much money their shares of stock contributed to the company they invested in.
Financial statements used to calculate earnings per share

Income statement

Balance sheet

Mutual Fund
Investment companies manage these funds that typically feature diversified portfolios.
Mutual Fund Diversification
This strategy allows individuals to make investments that have various characteristics and levels of risk; this serves to minimize losses.
Stocks

We use this term when referring to ownership interests in a given company. They can also be called shares or equities. These investments have a high amount of risk.

Treasury Bond
A security known for having the lowest amount of risk along with the lowest rate of return on investment.
Municipal Bond
These bonds can be offered by governments at the local, city and state level. They can be used to raise money for governmental projects.
Secondary Market
You can use this market when trading bonds or stocks that were already presented and sold through the primary market.
Primary Market
This is the market where securities are offered when a company first goes public and offers them.
Preferred Stock
Individuals who own this kind of stock get first rights if a business is liquidated and have a guarantee for dividends. However, they get no right to vote.
Accredited Investors
If you're this kind of investor, you can participate in private placement for bonds or stocks and you have enough wealth to handle losing your whole investment.
Return on Investment (ROI) Formula
Net profit / total investment x 100 = return on investment
Index Fund
This fund will give you ownership of some portion of all the companies being traded on an exchange.
Exchange Traded Fund
A collection of funds that are traded as though they are stocks.
Real Interest Rate Formula
The nominal rate, or the rate provided by a financial institution - the inflation rate
Management Fees
A fee associated with mutual funds that shareholders have to pay. It represents a given percentage of the assets contained in the fund.
A mutual fund charges a .2% management fee and has a value of ten million dollars. What is the annual management fee?
$20,000

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