Post on 28-Dec-2015
Personal Financial Personal Financial LiteracyLiteracy
Mrs. VanWartMrs. VanWart
1. CD = certificate of deposit
• lock in a guaranteed interest rate for specific period of time
• usually slightly higher than savings account
• incur penalty for early withdrawal
2. credit cards:
• charge a purchase• bill comes once a month• can pay minimum balance or more• interest charged on unpaid balance• merchant typically pays 3% of
transaction
3. IRA = individual retirement account
• must have earned income• can contribute up to $5500 per year
(+$1K “catch-up” if over age 50)• may be income limitations• can use either:
-pre-tax money (traditional IRA) or-after-tax money (Roth IRA)
4. stock:
• publicly-owned company sells shares for capital
• shareholder owns part of the company• prices can be volatile
5. mutual fund:
• group of stocks (by sector, type, etc)• actively or passively managed• allows investor to buy more types of
stock for less money
6. bond:
• similar to an IOU• bondholder gets interest from issuer
• types of bonds:-corporate-treasury-savings (EE or I)-municipal
7. mortgage:
• loan on a home or other real estate• secured by that property
• “under water” mortgage:-more is owed on the mortgage than the property is worth
8. formula to calculate simple interest:
I = prt
(interest = principal x rate x time)
9. FICO score:
• credit score that lenders use to determine interest rate of loan approval
• ranges from 350-850
• Fair Isaac Corporation
• request one free credit report each year:www.annualcreditreport.com
10. FAFSA = Free Application for Federal Student Aid:
• parents usually complete the form
• colleges use it to determine financial aid and expected family contribution (“EFC”)
11. 529 plan:
• tuition savings plan
• earnings are tax-exempt if used for qualified expenses
• different states have different rules
12. 401(k) plan:
• company sponsored retirement savings plan
• often company will match contributions
• current limit = $17,500 per year(+ $5500 if over age 50)
• withdrawal at age 59 ½ or later-or incur a penalty
13. Income tax filing deadline:
• April 15 (usually)
14. New Jersey unemployment rate:
• 9.8% (July 2012)• 7.8% (Dec 2013)
• U.S.: 6.7%
• Rate dropped “for wrong reasons”
15. New Jersey sales tax:
• 7%
• 3.5% in urban enterprise zones