Contributions are pre-tax and can be put into the investments of your choice. The growth in the account is tax-deferred until you withdraw the money. Many people also roll the funds from 401(k) or other company retirement plans into IRAs when they change employers or retire.
No upfront tax benefits but gains are tax free and there is no taxes on withdrawals. (IRS penalty for early withdrawal still aplies)
Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) is a tax-deferred retirement account setup by employers with less than 100 employees. Easy administration and low cost to employer.
Simplified employee pension (SEP) allows small employers, often self-employed, to provide a basic retirement plan for themselves and their employees, if any, without the cost and responsibility of a 401(k)
A tax-advantaged, defined-contribution retirement account offered by many employers.
A retirement account for certain employees of public schools and tax-exempt organizations.
Taxable Investment Account
Individual and/or joint investment accounts that is taxable on an ongoing basis.
An investor who believes the market as a whole or a particular stock will decline. A bear is the opposite of a Bull.
An investor who believes the market as a whole or a particular stock will rise. A bull is the opposite of a Bear.
When most stock prices are rising over several months.
When most stock prices are falling our several months.
The highest price a buyer is willing to accept when purchasing a security (stock).
The difference between Ask and Bid.
If you own a stock, you own part of the company. A stock is evidenced by a paper certificate.
An investment company that combines the money from a large group of investors to buy stocks and other investments.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).
A company that has a history of solid earnings, regular and increasing dividends, and an impeccable balance sheet.
The value of a company if all liabilities were subtracted from total assets.
A person that buys or sells an investment for you in exchange for a fee called commission.
A portion of a company’s profits that is paid out to shareholders on a quarterly or annual basis. The Board of Directors of the company declares dividends. It is not mandatory to declare dividends on common stock even though the company is making good profits.
DOW JONES INDUSTRIAL AVERAGE (DJIA)
It is the most popular and widely used measure of the U.S. Stock Market. It consists of a price-weighted list of 30 highly-traded Blue Chip companies. The Dow is watched by investors as an indicator of the health and direction of the stock market.
EARNINGS / PROFIT
That portion of income left over after meeting all costs, overhead and taxes during a reporting period. This is called the Bottom Line. When a company is making money, it is said to be “in the black”. When a company is losing money, it is “in the red”.
INCOME / REVENUE / SALES
What a company earns for the goods they produce, or the services they provide. It is not the same as profit.
Also known as “market cap”. It is calculated by multiplying the current price per share with the number of shares outstanding.
How much money you are paying for $1 of the company’s earnings. In other words, if a company reports a profit of $3 per share, and the stock is selling for $30 per share, the P/E ratio is 10 because you are paying ten-times earnings ($30 per share divided by $3 per share earnings = 10 P/E).
Includes stocks, bonds, and bank deposits.
The number of shares of stock traded in a day.
When a company pays a dividend the yield is the percentage of dividend over the stock price. In other words, if a stock is trading for $10 and pays a dividend of $0.50, the yield is 5%, because for every $10 you invest, you would receive 5% back annually being $ 0.50