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On the other hand, how many times have I heard… “My tax guy never told me… I wish I’d known about… They should’ve taught this stuff in school!”
I’ve found that understanding key terms and basic concepts is a jump-start to meaningful discussion, more choices—and the right decisions.
Check your financial savvy of the following terms, acronyms and concepts—positive reinforcement of your knowledge and experience. I suspect this is an “easy A” for most Scoop readers, so enjoy “speaking” financial!
(Due to space, brief answers below are mainly clues to further checking on your own.) Q: 1—What’s the difference between a) equities and stocks; b) stocks and bonds; c) capital gains and ordinary income; d) load and expense ratio; e) IRA and ROTH; f) power of attorney and executor; g) will and trust; h) fixed and variable annuities? A 1—a) None, they mean the same thing—ownership share in a company;
b) Purchasing shares of a company’s assets vs. loaning money to help a company operate;
c) Earning a return on an investment or asset above its purchase price vs. salary, wages, dividends or interest;
d) Sales charge to purchase a mutual fund vs. yearly fund management costs;
e) Pre-tax dollars saved in an Individual Retirement Account vs.an after-tax retirement IRA;
f) Person legally designated to manage your affairs pre-death vs. after death;
g) Legal disposition of property after death vs. pre-death asset management vehicle plus advantages: avoids probate and remains private with a successor trustee after death or incapacity;
h) Insurance retirement program with a guaranteed rate of return vs. returns based on market forces. Q: 2—Do you know the meaning of: a) ETFs; b) CDs; c) The DOW, S&P 500, NASDQ; d) cost basis; e) ROI (2 meanings); f) FINRA; g) FDIC; h) REIT; i) TNW? A 2—a) Exchange Traded Mutual funds that can be bought/sold daily like a stock;
b) Certificates of Deposit: locked in bank interest rate for specified period;
c) Three main financial indexes that track varied aspects of the economy on a daily basis;
d) The initial cost of an asset: investments, home; e) Return ON and OF an investment—earnings figured beyond the initial amount invested;
f) Financial Industry Regulatory Authority that covers Broker/Dealers and personnel to protect investors from fraud and bad practices;
g) Federal Deposit Insurance Corporation that covers bank deposits up to $250,000;
h) Real Estate Investment Trust, an investment vehicle for steady returns and profits; excellent retirement vehicle;
i) Total Net Worth, all assets of an individual minus liabilities. |
