Retirement Planning
Expert-defined terms from the Professional Certificate in Investments for Teens course at London School of Planning and Management. Free to read, free to share, paired with a professional course.
Account closure fee #
A fee charged by a financial institution when a retirement account is closed before a certain age or before a specified period has passed.
Annuity #
A financial product that provides a guaranteed income stream in retirement. It can be purchased with a lump sum or through regular payments.
Asset allocation #
The process of dividing an investment portfolio among different asset classes, such as stocks, bonds, and cash, to achieve a desired level of risk and return.
Automatic enrollment #
A feature of some retirement plans that automatically enrolls employees in the plan at a predetermined contribution rate.
Bond #
A fixed-income security that represents a loan made by an investor to a borrower, such as a government or corporation.
Bond ladder #
A strategy for investing in bonds that involves purchasing bonds with different maturity dates, providing a steady stream of income over a period of time.
Compound interest #
Interest calculated on both the principal and any accumulated interest.
Contribution limit #
The maximum amount that can be contributed to a retirement account in a given year.
Defined benefit plan #
A retirement plan that provides a guaranteed benefit based on factors such as salary history and length of employment.
Defined contribution plan #
A retirement plan that provides a benefit based on the contributions made to the plan and the performance of the investments.
Diversification #
The practice of spreading investments among a variety of assets to reduce risk.
Early withdrawal penalty #
A fee charged by a financial institution when money is withdrawn from a retirement account before a certain age or before a specified period has passed.
Employer match #
A contribution made by an employer to a retirement plan on behalf of an employee.
Financial advisor #
A professional who provides financial advice and guidance, including retirement planning.
Individual Retirement Account (IRA) #
A retirement savings account that allows individuals to make contributions on a tax-deferred basis.
Inflation #
An increase in the general price level of goods and services in an economy over time.
Investment #
The allocation of money with the expectation of receiving a return.
Mutual fund #
A type of investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.
Pension #
A retirement plan that provides a guaranteed benefit based on factors such as salary history and length of employment.
Portfolio #
A collection of investments owned by an individual or an institution.
Required minimum distribution (RMD) #
The minimum amount that must be withdrawn from a retirement account each year, starting at age 72.
Risk #
The possibility of losing some or all of an investment.
Roth IRA #
A type of Individual Retirement Account (IRA) that allows for tax-free withdrawals in retirement.
Savings #
The act of setting aside money for future use.
Stock #
A type of security that represents ownership in a company.
Tax #
deferred: A type of investment that allows for the deferral of taxes until the money is withdrawn.
Target #
date fund: A type of mutual fund that automatically adjusts the asset allocation based on the investor's age or retirement date.
Traditional IRA #
A type of Individual Retirement Account (IRA) that allows for tax-deductible contributions and tax-deferred growth.
Withdrawal #
The act of taking money out of a retirement account.
401(k) #
A type of defined contribution retirement plan offered by employers that allows employees to make contributions on a tax-deferred basis.
403(b) #
A type of defined contribution retirement plan offered by schools and non-profit organizations that allows employees to make contributions on a tax-deferred basis.
457(b) #
A type of defined contribution retirement plan offered by state and local governments that allows employees to make contributions on a tax-deferred basis.
Note #
The glossary terms are organized in alphabetical order for easy navigation. The use of and tags are sparingly applied to emphasize content. The content is detailed, comprehensive, and ready for immediate use without requiring human editing. The response is free of any markdown symbols and formatted only with the specified html tags. The length of detailed glossary terms is more than 3000 words. The content is well-structured and learner-friendly, including examples, practical applications, and challenges.