Types of Investments:
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401k plan is a defined contribution plan where an employee can make contributions from his or her paycheck either before or after-tax, depending on the options offered in the plan. The contributions go into a 401k account, with the employee often choosing the investments based on options provided under the plan.
A written and signed promise to pay a certain sum of money on a certain date, or on fulfillment of a specified condition.
A debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations.
Certificate's of Deposit:
A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC.
A debt security issued by a state, municipality or county to finance its capital expenditures. Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if you live in the state in which the bond is issued.
Money Market Mutual Funds:
an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper.
A security issued by a corporation that is considered to offer a high risk to bondholders.
Government Savings Bonds:
A U.S. government savings bond that offers a fixed rate of interest over a fixed period of time. Many people find these bonds attractive because they are not subject to state or local income taxes.
Treasury Notes and Bonds:
A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years.Treasury bonds make interest payments semi-annually and the income that holders receive is only taxed at the federal level.
A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).
A stock or any other security representing an ownership interest.
Diversification is designed to reduce exposure to risk. This is typically done by combining a variety of investments that are unlikely to all turn out the same way. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.
Lower Risk Package:
-Money Market Mutual Funds
-Government Savings Bonds
-Certificate of Deposits
-Treasury Notes and Bonds
High Risk Package: