Personal Finance Flashcards
(19 cards)
Why do people need to have personal savings in a bank?
You can take out money at any time
Purpose of a mutual fund
Automatic investing & security
What Does it mean to have a portfolio that is diversified?
Investing in many different stocks
Why are municipal bonds attractive to investors
Generally exempt from federal income tax
Difference between a stockholder and a bond holder
Stockholders = ownership of stock
Bond = creditor of stock
What is NY stock exchange
Largest stock exchange
What is Dow Jones industrial average
1 indicator of stock market health
Liquid savings
Turns investment into cash/bonds
Who is most risky vs less
Over 60= less risky
Early - mid 20= more risky
Rule of 72
72 divided by interest rate
5 components of credit score
Payment, history, debt amounts, length of credit, history, new credit inquiries, Credit mix
Revolving vs installment credit card
Revolving = always open
Installment = set payments for set # of years
What is good and bad FICO
FICO = credit score
Good = 720 above
Bad =619 below
How does bad credit affect you
High interest
Pay yourself first
Put money in savings 1st
Dividend
Percent of money paid regularly by shareholders
What is interest
Cost of borrowing $
What is dollar cost averaging
Makes you more discipline and consistent
What is APR
annual % rate
#1 interest rate
