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Book Title – Rich Dad, Poor Dad
“This book was amazing! Everyone should read it!” – Rob on Jan 14, 2015
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Cool News About Money and Investing
There are more than 1.6 million Automatic Teller Machines (ATM) in the world.
If you could double your money every year for 20 years in a row, just one dollar would turn into more than one million. ($1,048,576)
Long-term investing is similar to planting a fruit tree and waiting for your favorite fruit to grow and ripen, it takes time but is worth the wait.
Buying stock is loaning money to a business with the expectation of getting more money back than you originally gave out because you believe the business will make a profit.
A 1943-penny sold for $1.7 million. How can you tell if your 1943 copper penny is real? Use a magnet. If the penny sticks, it’s not copper.
Key Financial Terms
4 Pillars of Personal Financial
- Spend – buying something
- Save – to keep something
- Donate – give your time, talents, or money to help others
- Invest– to use money to make more money
Account statement – The report of activities for an account
Account – A report of money that has been paid and money that has been received
Accounts– Report of income and expenses
Activities – Something done for work, school or another purpose
Advertising- Sharing information with people by paying for it to be announced, such as commercials or billboards
Appreciation – The increase in value of something (art, baseball cards, etc)
Asset – Anything with value that is owned by someone, such as cash, stocks or property
Automated Teller Machine (ATM) – A machine that people use to get money from their bank accounts by using a special card. You must have money in your bank account to withdraw money
Balance – The amount of money in an account, after you have put in and taken out money out of that account, always put in more money than you takeout
Bank – A place for the safekeeping of money and other money activities
Bankrupt – Having no money and does not have to payback any of the debt but in exchange a judge makes you give up of certain belongings. It also means that you have bad credit.
Bear Market – Loss or downward movement in the market. The use of “bull” and “bear” to describe markets comes from the way the animals attack their opponents. A bear swipes its paws down. These actions show a movement down or loss, so the trend is down.
Beneficiary – The person chosen to receive things (money, stock or real estate) from a person after that individual’s death
Board of Directors – People chosen by shareholders to watch over the management of the company
Bond – A note with a promise to pay back an amount of money that was borrowed and to pay interest for the borrowed money
Bounced Check – A check that a bank returns because it is not enough money in the account. Only write checks that you have enough money in your bank account to cash.
Bubble – When everyone is buying something – homes, stocks, tulips, etc., and they go up beyond reason. Usually on the hopes it will keep going up and never seeing an end to the rise.
Budget – A plan used to decide the amount of money that can be spent and how it will be spent. A plan can also decide how much money to save. As an example, if you want to buy a new backpack for back-to-school you can make a budget based on your allowance, summer job and other monies you earn. If you follow you budget you will save enough money to buy your new backpack.
Bull Market– Gain or upward or movement in the market. The use of “bull” and “bear” to describe markets comes from the way the animals attack their opponents. A bull thrusts its horns up into the air. These actions show a movement up, so the trend is up.
Business plan – The written idea of how a company operates
Capital gain – The increase in the cost of something (stocks, buildings, homes or land) between the time it is bought and the time it is sold
Capital loss – Money loss in cost of something (stocks, buildings, homes or land) between the time it is bought and the time it is sold
Career – A job or profession for which the person studies or trains
Cash – Money
Cash Flow – The movement of money
Cash Flow statement – Both an income and what it cost statement
Charitable gift – Give help to those in need or a donation
Check – A written order telling a bank to pay money as instructed
Checkbook – A book of checks for use with a checking account
Checking account – An account that the bank account owner uses to write a check or electronically withdraw money that is in the bank. Example, a dad may write a check to a babysitter for watching the kids while they go to the movies.
Collateral-Property that a person promises to give-up in case they cannot pay back a debt
Collectibles – Something that is considered valuable by collectors (art, baseball cards, cars, etc.)
Collection agency – A business that is paid gets money from people who have not paid a debt. They send you letter and call you until you pay what you owe the company.
Comparison shopping – Researching something you want to buy to find the best price
Compensation – Payment for working; or something given to make up for something that was damaged
Complaint – A statement that you are unhappy or not satisfied with something
Compounding-Calculating interest on both an amount of money and the interest it has already earned
Consumer- A person who buys something
Contract– A legal agreement between people
Creating a strategy — Setting goals and creating a plan to achieve the goal, usually over a long period of time
Credit – The ability to buy something based on trust that you will pay them back. Example, you have a lemon aide stand and you sell lemonade for 10¢ a cup. You best friend wants a cup today but does not have 0¢. You agree to give him a cup today but he has to pay you back .15¢ (the extra .5¢ is interest)
Credit report – A record of credit history; so be sure to pay your bills on time.
Credit score – A report that shows if you paid your bills on time. Example; A high credit score will make it easier to buy a car or house, so make sure you pay all your bills on time and do no buy anything you cannot afford with your allowance.
Credit union – It is like a bank but people with something in common like their job or church own it. It’s a place to save money and borrow money. They are non-profit and emphasize consumer deposits and loan services.
Currency – Something that is used as money
Debit card–A plastic card that provides access to your money for cash and purchases. You need to have money in the bank to use your debit card.
Debt-Money owed by one person to another. It is best to save for a purchase instead of borrowing money to buy something.
Deductible-The dollars taken out the a total amount of the payment. Example: It may cost $100.00, for a dental cleaning but the insurance company will only pay the dentist $75.00. You have to pay the dentist the $25.00 balance. You will have a deductible on your insurance when you by a car or house, so make sure you know that amount.
Default– The failure to pay back what you owe. You do not want to be in default.
Dependent– A person who is supported by someone else, especially for money. Children are dependents until they are at least 18 years old.
Deposit- Money given as a guarantee to complete the purchase of something.
Disposable income- The amount of money left to a person after being paid, and then paying all bills and putting away savings. You should regularly invest some of your disposable income.
Diversification– Having a variety of stocks that you invest in so that you reduce risk if one stock is not making money. This is not putting all your eggs in one basket.
Dividends– your earnings from stock because the parent company made money. Allowing the earning stay in your account to automatically buy you more shares of stock is known as dividend reinvestments.
Dow Jones Industrial Average is simply the average value of the 30 largest U. S. companies, which is about 25% of all stocks. These are “market averages” that tell you how companies traded on the stock market are doing just like the S&P 500 or The Russel 2000.
DRIP or Dividend ReInvestment Program – All of your “&Stock” is in the DRIP. When your stock makes a profit the program automatically reinvest dividends paid to you, using these dividends to purchase even more stock shares.
Earned income – Money you made from working any job
Easy-access credit– A way to borrow money if the person with bad credit. Try not to ever get a loan from Pawnshops, Payday loans, Rent-to-own, and Title loan companies.
Electronic Funds Transfer (EFT)- When a person uses a computer to move money from one account to another account without going into the bank.
Emergency fund–Money saved and only used if something unexpected and very important happens, Example if a person lost their job this money will pay their bills until they find a new job
Employee Benefit- Something that an employee receives in addition to earned income. Examples include health insurance, life insurance, a company car.
Employer-sponsored retirement savings plan- The Company you work for allows you to put money into an investments plan with other employees. Sometimes the company will add even more money to your account. Often known as a 401K plan
Entrepreneur– People who starts their own business
Equal Credit Opportunity Act– A law that forbids lenders from discriminating against loan applicants on the basis of gender, race, marital status, religion, national origin, age, or receipt of public assistance.
Equity– Your stock ownership in a company. Equity entitles you to a portion of the company’s profit.
Estate– The money and property that a person leaves behind at death They can also leave debt like owing money. It is important for adults to plan their estate and have it in writing.
Ethics– A set of moral values or beliefs that control an individual’s actions. Example, being honest is a great value to have
Exchange or Marketplace -Where people go to buy stocks
Expense-The cost of things you buy. Examples are food, clothing, mortgage or rent, insurance, sports and entertainment. The money an adult earns should always be higher than their expenses.
Fair and Accurate Credit Transactions Act (FACT Act)- If someone uses your personal information to buy things without your permission there is a federal law that keeps you from having to pay back the money. Look up identity theft.
Fair Credit and Charge Card Disclosure Act– Credit card companies must let you know all the fees you will pay if you use the credit card. Also known as a part of the Truth in Lending Act.
Fair Credit Billing Act– If your credit card has a charge that you did not approve, you can write the credit card company and report the mistake. The credit card company will look at the charge and you do not have to pay if it is not yours.
Fair Credit Reporting Act–Allows you to see your credit report. Then you can write a letter and explain why you have a bad report or ask for information to be taking off the report. You always want to have a good credit rating so be careful with credit
Fair Debt Collection Practices Act- If you did not pay your bill someone called a Collection Agent may call you and try to get you to pay the money you owe. But they cannot be dishonest or threatening you to get payments from you.
Federal Deposit Insurance Corporation (FDIC)- Your money is protected by the government if the banks closes at up to $100,000.
Fee –A payment you make for a service Example: you may pay a fee to use an ATM or credit card.
FICA– Federal Insurance Contributions Act (See Social Security.)
Finance Charge-The total dollar amount paid for credit. Example: A $100 loan to by a video game that must be paid back with $9.00 interest plus a $1.00 service fee has a finance charge of $10.00. So, you actually paid $110.00 for the game.
Financial Adviser– People who has a job of giving other people advice on how to spend, save, donate and invest their money. Some careers are employee benefits staff, bank and credit union employees, credit counselors, stockbrokers, financial planners, accountants, insurance agents, and attorneys.
Financial Goals– A plan you have to have a set amount of money by a special date.
Financial institution– A bank
Financial investment -the purchase of stocks or property to increase wealth in the future
Financial Literacy– Using the information and skills you learned to make smart money choices, so you have a lifetime without worrying about money.
Financial Plan– A detailed report of your financial goals
Fixed interest securities (also called bonds) – you loan your money to a company
Fixed-rate-A loan with a rate that does not change
Fraud– Being dishonest about information to make money. This is illegal
Garnishment–A court orders that money is taken out of your paycheck because you have a debt that you owe and did not pay.
Grace period– A short amount of time given to you by a company to pay back the money you borrower before they add a financial charge.
Remember: Try to pay all bills on time or early so you do not have to pay a penalty.
Gross pay- This is how much you earn before taxes are taken out of your paycheck.
Example: You work 20 hours on a summer job and you are paid $10.00 per hour. You gross pay is $200.00 but the federal government and possibly your state will take taxes out of your paycheck. Instead of getting your gross pay of $200.00 you will receive a net pay for about $160.00 because you must pay $40.00 in taxes.
Hedge fund – an investment company for a small number of large investors (usually the minimum investment is $1 million)
Identity theft-The crime of pretending to be someone else by using their personal information. Examples are credit or debit card number, Social Security number. Do not share your social security number, account numbers or passwords.
Impulse buying- Purchasing something without thinking about if you really need it. Example: Be careful about buying things near the checkout line are store. They are placed there so you will ask your parents to buy stuff that you really do not want or need.
Income– Money earned through employment and investments.
Individual Retirement Account (IRA)
Individual Retirement Account (IRA)- A way to invest money earned with special tax benefits.
Examples: A traditional IRA defers taxes on earnings until withdrawal the money.
A Roth IRA requires after-tax contributions only, but allows tax-free withdrawals under certain rules.
Inflation- the same amount of money will buy less and less as you grow older.
Example: The price of milk cost more now than it did last year.
Insurance- A promise to repair something because you have paid for the protection.
Example: I someone accidently hits your car then your insurance company will pay for the repairs to fix your car. But remember you may have to pay a deductible.
Interest income– Money that a bank or company pays you for investing in their company after the company makes money.
Interest– The amount of money (fee) you must pay for borrowing money
Invest– Use money to make more money
Investing -Purchasing stocks with the goal of increasing wealth over time
Investments are something you buy or put your money into long term to make more money Remember: There is a risk of loss in investing
JackieTrust- Providing high-quality services that engage children in the financial literacy skills, to teach about long term investing while having fun. A company that assist adults deliver tangible gifts connected to and along with shares of a company’s stock, helping educate youngsters about how everyday products can translate into corporate profits.
Job– A career or a position at a place you work with responsibilities and pay.
Kaizen – Change for the better
Lease– A written contract giving use of property for legal responsibilities of both parties to the agreement, such as a landlord and tenant
Liability-Having to pay your part if something goes wrong. Example: damage of property
Liquid Asset– Having something that can easily become cash. Example: certificate of deposit
Liquidity– Having assets that can easily be turned into cash. Usually referring to a business
Living will–A document that tells others what type of medical treatment a person wants if they become too ill to make decisions; also known as a health care directive
Loan shark- A bad person who illegally lends money to someone who is very desperate and charges a really high interest rate.
Long-term investing—A long time commitment that helps you keep our stocks for a very long time because you know overtime it will make money
Market Index – Provides a summary of the stock market by watching what is happening to some of the top stocks; also provides a hint of what will happen next.
Examples of a market index are The S&P 500, NASDAQ, Dow Jones, Russell 2000 and Wilshire.
Example: If the list of stocks being watched continue to go up, the market index may tell us that the stock market is strong and the economy is growing.
Marketplace or Exchange -Where people go to buy stocks
Maturity–The date that you have to pay back money you borrowed
Medicaid -A program that pays specified health care costs care for those who cannot afford them.
Medicare –A program that pays health care expenses for senior citizen.
Mortgage- A long-term loan to buy real estate, that is, land and a house or other properties
Mutual fund- An investment tool that brings together money of many shareholders and then invests it in a diversified (several difference types of stocks) portfolio
NASDAQ ( or Nasdaq exchange) – A place where mostly tech stocks are traded (bought and sold). Like the NYSE but known as a great place for the tech sector and innovative companies
Nasdaq Composite – tracks about 3000 technology or innovative companies that are traded on the Nasdaq exchange; also gives an idea of how the technology sector is doing. These are “market averages” that tell you how companies traded on the stock market are doing just like the Dow Jones, S&P 500 or The Russel 2000.
Net worth- A person’s wealth. This is the total amount a person has when you add up what is owned (as- sets) minus what that person owes (liabilities). What is your net worth?
New York Stock Exchange (NYSE) – The name of a famous place where people go to buy or sell stocks (it is kind of like a store that is located New York City)
Opportunity cost– What you give up when you buy something instead of waiting; also known as a trade-off. Example: I can buy a t-shirt now or continue to save my money and buy running shoes, which I really need.
Organization (The Organization)- A company or corporation
Pawnshop– An store that that makes very high-interest loans if you give them something of value to keep while you owe them money, such as jewelry.
Payday loan – An business that makes high-interest loans to people until you get your next paycheck. This practice is illegal in some states.
Payment method-The way you pay back a debt. Examples are: such as by cash, check, credit card, debit card, smart card, or stored value card.
Payroll deduction- An amount of money your employer withholds from a paycheck. There are some mandatory deductions such as taxes. Voluntary deductions include loan payments, charitable contributions, and direct deposits into your bank accounts.
Peer pressure- You allow a group to influence you because you want their approval.
Pension Protection Act– A federal law that tries to make sure employees have a retirement plan. Businesses are allowed to automatically enroll employees in retirement savings plans.
Personal finance- What you use to get and manage your income and assets.
Philanthropy– Donating or contributing to others who are in need
Point of Sale (POS)- The place of a purchase. Example: There is software a company can use to track sales, inventory, and customer information.
Portfolio– All of your investments that you own
Examples are your stocks, bonds, mutual funds, and real estate
Principal– An amount of money originally invested, or borrowed
Privacy– No one can legally share your personal information
Probate court- Having power over a deceased person’s Will and Estate.
Profit– The money you make
Property – you invest in any type of actual building
Prospectus– A legal document that provides a lot of information about mutual funds, stocks, bonds, and other investments offered for sale
Rate of Return or Yield- The yearly profits on your investment shares as a percent on the amount you invested.
Recordkeeping-The process of carefully watching over your finances
Rent– The amount you pay to have use of someone else’s property.
Rent-to-own– A person has a plan to buy something by paying for it until all the final payments are made. This is because the person may not have enough money to buy it all at once. Usually you pay much more for whatever you are buying if you rent-to-own.
Repossession– Legally taking something back from someone, often without notice, if the person failed to pay back the loan.
Example: Repossession of a car if the person did not pay the monthly payment.
Retirement account for an individual that permits individuals to set aside up to $2,000 per year, with earnings tax-deferred until withdrawals begin at age 59½ or later (or earlier, with a 10% penalty).
Retirement- A time when you stop working at a job, and start living off your wise investments
Risk– calculating the chance of a loss or the uncertainty of an investment’s rate of return
Risk and reward—Stocks, bonds and mutual funds are generally more uncertain than a savings account, but stocks can also make your money grow much faster.
Risk management- When a person looks at the possible chance of something going wrong and develops a way to minimize or manage loss, Examples: Diversifying investments so if one stock does not perform you still have others that are doing well.
Rule of 72- A estimate of the time or interest rate needed to double the value of an investment.
Example: To figure out how many years it will take to double the dollar amount invested at an annual rate of-
8% divide 72 by 8, for a result of 9 years
10% divide 72 by 8, for a result of 7.2 years
2% divide 72 by 2, for a result of 36 years
This is why long term investing is suggested for young people
The Russell 2000- Tracks 2000 of the smallest public companies to find the average value. These are “market averages” that tell you how companies traded on the stock market are doing just like the S&P 500 or
Salary-Compensation (money earned) for work, usually paid weekly, bi-weekly, or monthly
Saving– Setting money aside for future spending. Saving provides cash for emergencies and short-term goals, and funds for investing.
Savings account–A deposit account at a bank or savings and loan, which pays a small amount of interest and cannot be withdrawn by writing a check.
Savings and loan (S&L)- Like a bank that takes deposits from individuals, loans money for mortgages, and pays dividends. Slightly different from a bank because its specialized in real estate financing and are corporations or mutual funds.
Savings bond– A document representing a loan of more than one year to the U.S. government, to be repaid, with interest on a specified date.
Scam-A dishonest or false activity to take a person’s wealth
Example: Someone calling your grandparents and falsely telling your grandparents that they won the lottery, but to get the lottery money they have to first send their money to the ‘scam’ person. This is also called fraud.
Standards and Poor’s 500 (S&P 500) – An American stock market index based on 500 large companies. These represent a variety of industries and sectors and are about 70% of all the stocks that are publicly traded. The stocks are listed on New York Stock Exchange (NYSE) or NASDAQ
Security and Exchange (SEC) – A federal agency that watches over (regulates) the stock market and financial institutions to protest investors and your investments
Sectors- categories or groups because stocks are sorted into different classifications Examples are transportation, sports, medical, etc.
Security– A legal agreement that shows or records a debt or equity from a corporation, government, or other organization.
Examples: stocks and bonds
Shares – Your equal portion of the company based on your stock purchase which gives you part ownership.
Example: Jackie has purchased 200 shares of Walmart stock in the market place
Short-term gain- A financial profit on an investment, which was not held for a long time (often a year and a day). A short-term gain usually results in a higher tax rate than a long-term gain.
Simple interest- Interest calculated periodically on loan principal (initial amount) or investment principal only, not on previously earned interest.
Social Security Benefits–A U.S. program that provides benefits to retired, disabled, and unemployed people
Social Security Taxes– A required withdrawal from your paycheck for employers and employees that pays for the Social Security program.
Spending plan- a budget
Standard of living-The amount of things a family feels is needed to have a comfortable life.
Example: Home, car, food, travel,
Stock dividend– An amount of money paid as additional shares of stock rather than as cash. You are enrolled in an automatic Dividend Reinvestment Plan (DRiP).
Stock market– a place where stocks and bonds are “traded” – meaning bought and sold
Stock– An investment that represents shares of ownership in a company
Remember: If you keep your stock for at least 15 years or more you usually succeed in the market. Stocks are long-term investments. But there are no guarantees
Stockholder– People who own shares of stock
Remember to vote! As a stockholder you have the right to vote on certain company matters, including the board of directors.
Stored-value card- Prepaid plastic card, usually a gift, that lets you purchases based on the value of the card.
Take-home pay- A person’s gross salary, plus any bonuses, minus taxes, health insurance, and retirement savings. Its what is actually goes into your bank account.
Tax deduction –An expense that a taxpayer can subtract from taxable income.
Examples are kids living at home under 18 years of age, home mortgage interest and for donations.
Tax– A government fee on business and individual income, activities, or products such are cars, clothing, equipment.
Remembers sales taxes and income taxes are different in each state.
Tech Sector- Technology Sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services.
The power of compound growth—Compounding can have a snowball effect as your original investments and the earnings on those investments grow together over time.
Remember: The sooner you start investing, the greater the impact compounding will have, so it’s important to understand the benefits of investing early.
Time value of money-The potential of an investment to increase in value through periodically compounded earnings.
Tip– The amount paid for a service beyond what’s required, usually to express satisfaction; also known as a gratuity.
Example: Often we tip the wait staff in a restaurant 15% – 20% over the cost of the bill.
Title loan- Using the borrower’s car as collateral at a very high-cost for a short-term loan. The borrower pays back the loan with a huge interest rate.
Trade- A transaction to buy stock
Transfer payment- Money that a government provides to citizens for reasons other than current employment or the delivery of goods or services in exchange.
Examples include Social Security, veteran’s benefits, and welfare.
Trust– A legal arrangement through which a person manages the assets for the good of one or more persons.
Example: A child was not old enough to manage her money so the uncle, who is called a trustee, was in change until the young people graduated from college.
Truth in Lending Act- Banks must tell you everything about the cost of borrowing money. This way you are not surprised by the cost you have to pay back to the bank.
Example: including the interest rate and the cost of late payments
Truth in Savings Act– Banks must tell you everything about interest-earning accounts.
Example: If you have to keep a minimum amount of money in the account or pay an extra fee.
Unearned income– Investment returns is an example. This is money, you get from sources other than employment.
Values – A person’s beliefs about what is important. Your values often influence your decisions.
Example: It is right or wrong to you?
Wage – Earned payment for work which is hourly, daily, or by completion and paid on a schedule that is weekly, biweekly, or monthly. John worked 5 hour a day at the movie theater. John works 3 days a week at $10.00 per hour. His daily wage is $50.00 plus 3 days is a total of $150.00 each week.
John is paid biweekly (every 2 weeks) so his earnings are $300.00 before paying taxes.
Warranty – A written promise from a company that allows you to return, replaced, or repaired the product because you are not satisfied and an agreed upon reason.
Wealth – Having a lot or a huge quantity
Welfare– Government program that helps people in need by giving money others items.
Will– This is what a person decides (declares) in writing as their legal wishes for the sharing of a their wealth after death
Withdrawal– Remove money from a back or investment
Yield or Rate of Return: The yearly profits on your investment stock shared as a percent on the amount you invested.
Example: If you have a $4.00 annual, which is yearly dividend divided by your share of stock, of $40.00, you have 0.010 rate of return, or as a percent this is a 10% rate of return
What is the rate of return on your stocks?
Stuff&Stock® is a great option because it aides in building your child’s wealth and money management skills. Plus, it eliminates finding the “right” gift.
It’s okay to ask friends and family to give a gift that can help build your child’s financial future! An easy way to do this is by sharing a JackieTrust® invitation with your loved ones. Download, print, email, and share on social media to give others the opportunity to give a gift that can change your child’s life!