401 (K) Plans
It's a contribution where an employee can make contributions from his or her paycheck either before or after tax.
Certificates of Deposits (CD's)
A savings certificate entitling the bearer to receive interest.
Insured by the FDIC.
Term ranges from one month to five years.
A investment which the person who invested loans money to the entity (government or corporate) which borrows the funds
+Characteristics of Bonds:
Face value-the amount of money the bond will be worth when it matures throughout time.
Issue price-the original sell price of the bond.
Bond type 1: Corporate
Type of bond issued by a corporation.
Considered HIGHER RISK than government bonds because interest rates will always be higher.
Bond type 2: Municipal Bonds
Issued by the state, municipality or county to finance its capital expenditures.
Can fall under two categories-general obligation or revenue bills.
LOW LEVEL of risk to other bond types
Bond type 3: Junk Bonds
Fixed-income bonds that are termed for being a non-investment grade bond.
They get their name "junk" bonds because of their HIGH RISK in comparison to investment-grade bonds.
When someone issues a junk bond they have less credit ratings so the investors demand these HIGHER YIELDS as compensation for the high risk investment.
Money Market Mutual Funds
Earns interest for shareholders while maintaining a NAV (net asset value) of $1 per share.
LOW RISK & LOW RETURN
A downside to these funds are that they are not covered by federal deposit insurance.
Corporate bonds that are high-risk and high-return. This is because in order to have a high return, a high risk needs to compensate for the additional risk. HIGH YIELD BONDS.
Government savings bonds
Offers a fixed rate of interest over a fixed period of time.
Not subject to state or local income taxes
Treasury notes, bonds and bills
Type of security that has a fixed interest rate and can last over one to 10 years.
Short-term debt obligation with a maturity level of less than one year
Backed and guaranteed by the Federal Government Treasury Department
Fixed interest U.S government debt security with a maturity of more than 10 years
Minimum deposit $1000
Ownership of any asset after all debts associated with the asset are paid off
HIGH RISK type of asset
Offer no guarantees
Subject to successes and failures