Investing Principles

Personal Finance

Time HorizonO The length of

time over which an investment is made or held before it is turned into cash (liquidated)

Risk - RewardO Potential returns

on investments rise with an increase in risk, as does the potential for loss.

Risk ToleranceO The ability and

willingness to stomach large swings in the value of his or her investments.

Compound InterestO Interest that accrues

on the initial principal and the accumulated interest of a principal deposit, loan or debt.O The more frequently

interest is added to the principal, the faster the principal grows and the higher the compound interest will be.

Pay Yourself FirstO Automatically

route your specified savings contribution from each paycheck at the time it is received. O Best done with

a Direct Deposit!

DiversificationO A risk

management technique that mixes a wide variety of investments within a portfolio.