Term
| Advantages of Mutual Funds |
|
Definition
| Diversification, professional management, minimal transaction costs, liquidity, flexibility, and service. |
|
|
Term
| Disadvantages of Mutual Funds |
|
Definition
| Lower than market performance, high costs, risky, taxes |
|
|
Term
| Fundamentals of Mutual Funds |
|
Definition
| When you own shares in a mutual fund, you make money in three ways. First, as the value of all the securities held by the mutual fund increases, the value of each mutual fund shares also goes up. Second, if a fund receives interest or dividends from its holdings, this income is passed on to shareholders in the form of dividends. Third, if the fund sells a securtity for more than it originally paid for it, the shareholders receive this gain in the form of a capital gains distribution, generally paid annually. |
|
|
Term
|
Definition
| A mutual fund that has the ability to issue as many shares as investors want. The value of all the investments that the fund holds determines how much each share in the mutual fund is worth. |
|
|
Term
|
Definition
| A mutual fund that can’t issue new shares. These funds raise money only once by issuing a fixed number of shares, and thereafter the shares can be traded between investors. |
|
|
Term
|
Definition
| A sales commission charged on a mutual fund. |
|
|
Term
|
Definition
| A mutual fund that doesn’t charge a commission |
|
|
Term
|
Definition
| The ratio of a mutual fund’s expenses to its total assets. |
|
|
Term
|
Definition
| A measure of the level of a fund’s trading activity, indicating what percentage of the fund’s investments are turned over during the year. |
|
|
Term
|
Definition
| An annual fee, generally ranging from .25 to 1.00 percent of a fund’s assets, that the mutual fund charges its shareholders for marketing costs. |
|
|
Term
|
Definition
| Mutual funds that invest in treasury bills, certificates of deposit, commercial paper, and other short-term notes, maturity of less than 30 days. |
|
|
Term
|
Definition
| Mutual funds that invest primarily in common stock |
|
|
Term
|
Definition
| Tries to maximize capital appreciation while ignoring income |
|
|
Term
| Small Company Growth Fund |
|
Definition
| Limit their investments to small companies |
|
|
Term
|
Definition
| Tries to invest in a portfolio that will provide the investor with a steady stream of income in addition to having the potential for increasing value. |
|
|
Term
|
Definition
| Generally pay more attention to strong firms that pay dividends |
|
|
Term
|
Definition
| Specialized mutual fund that generally invests at least 65 percent of its assets in securities from a specific industry |
|
|
Term
|
Definition
| One that tries to track a market index such as the S&P 500. |
|
|
Term
|
Definition
| Concentrates its investments in securites from other countries. |
|
|
Term
|
Definition
| A mutual fund that tries to balance the objectives of long-term growth, income, and stability. |
|
|
Term
|
Definition
| Mutual fund that invests primarily in bonds. |
|
|
Term
| Social Security-How is it Financed? |
|
Definition
| When you pay money into social security, you’re purchasing mandatory insurance that provides for you and your family in the event of death, etc. |
|
|
Term
| Social Security-Who is Eligible? |
|
Definition
| 95% of all Americans, police and continuously employed are covered by alternative retirement system |
|
|
Term
| Social Security-How are benefits figured? |
|
Definition
| Determined by: your number of years of earnings, your average level of earning, and an adjustment for inflation. |
|
|
Term
|
Definition
| a traditional pension plan in which you receive a promised or defined pension payout at retirement. |
|
|
Term
|
Definition
| A retirement plan in which the employee, possible with the help of the employer, provides the funds for the plan. |
|
|
Term
|
Definition
| a retirement plan in which the employer provides all the funds and the employee need not contribute. |
|
|
Term
| How is a cash balance plan different from traditional plans? |
|
Definition
| A cash balance plan grows at a set rate, regardless of how much is earned. |
|
|
Term
| Defined contribution plans |
|
Definition
| a pension plan in which you and your employer or your employer alone contriubtes directly to a retirement account set aside specifically for you. |
|
|
Term
|
Definition
| A pension plan in which the company’s contributions can vary from year to year depending on the firm’s performance. |
|
|
Term
| Employee stock ownership plans (ESOP) |
|
Definition
| A retirement plan in which the retirement funds are invested directly in the company’s stock. |
|
|
Term
|
Definition
| A tax-deferred retirement savings plan in which employes of private corporations may contribute a portion of their wages up to a maximum amount set by law. |
|
|
Term
|
Definition
| A tax-sheltered retirement plan for the self-employed |
|
|
Term
| Simplified Employee Pension Plan |
|
Definition
| A tax-sheltered retirement plan aimed at small businesses or at the self-employed |
|
|
Term
|
Definition
| Retirement account in which contributions are not tax deductible. |
|
|
Term
|
Definition
| a tax advantaged retirement account. |
|
|
Term
| What are the advantages of Coverdell plans? |
|
Definition
| It works just like the Roth IRA, except with respect to contributions. Contributions are limited to $2,000 annually per child for each child younger than 18. |
|
|
Term
|
Definition
| The process of planning for what happens to your accumulated wealth and your dependents after you die. |
|
|
Term
| 4 Steps in estate planning process |
|
Definition
| Determine the value of your estate, choose your heirs and decide what they receive, determine the cash needs of the estate, and select and implement your estate planning techniques. |
|
|
Term
| Annual Gift Tax Exclusion |
|
Definition
| The annual amount excluded from the federal gift tax. |
|
|
Term
| 5 Reasons why having a will is important. |
|
Definition
| Five reasons why having a will is important are if you don’t have a w ill, the court will likely choose a relative as the guardian to your children under the age of 18, a will may be the most appropriate way of providing for those needs for special needs children, property that isn’t co-owner or in trusts is transferred according to your wishes as expressed in your will, you can make special gifts or bequests through a will, and if you don’t have a will, the court will appoint an administrator to distribute your assets. |
|
|
Term
| What are the characteristics of a valid will? Is an oral will acceptable? |
|
Definition
| Three characteristics of a valid will are intro statement, payment of debt and taxes clause, and disposition of property clause. Handwritten and oral wills are both acceptable. |
|
|
Term
| What is the role of an executor? |
|
Definition
| The roles and duties of an executor are making sure that your wishes are carried out and managing your property until the estate is passed on to your heirs. |
|
|
Term
| How can a person transfer property to avoid probate? |
|
Definition
| Tenancy by the entirety is ownership that exists between married couples. In the death of one, the property automatically passes directly to the survivor. |
|
|
Term
| Why do women generally have a tougher time than men achieving financial security? |
|
Definition
| Because women generally earn less, they are less likely to have pensions, qualify for less income from social security because they generally earn less, and live longer than men. |
|
|
Term
| What are the planning issues to consider when you are expecting a child? |
|
Definition
| Survey your finances, plan for college, reconsider your insurance needs, update your wills and trusts, and take advantage of tax savings. |
|
|
Term
| How can you successfully manage debt? |
|
Definition
| Spend less than you earn and budget your money, know the costs, understand the difference between good and bad debt, make sure you can repay what you borrow, keep your credit score strong, and don’t live with bad debt. |
|
|
