| Glossary
S to W |
| S&P
500 |
|
See
Standard & Poor's Composite Index of 500 stocks |
| Safety
of Principal Fund |
|
The
least risky investment option found in a 401(k) plan. It is
designed to return all of the money invested with a regular
interest payment. |
| Sector
Funds |
|
Funds
that invest in a small portion of the market (e.g., technology
stocks or health care stocks.) |
| Securities
and Exchange Commission (SEC) |
|
The
agency of the U.S. government with primary oversight responsibility
for the securities markets and corporate accounting standards.
|
| Securities
Diversification |
|
An
investment strategy where the investments are made in many securities
to limit the effects of the price movement of any one security.
|
| Security
(Securities) |
|
An
investment in stock (company ownership) or debt of a company
or government. In a 401(k) plan, a security will be a well-defined
legal instrument that can be traded on one of the public markets.
|
| Security
Risk |
|
The
chance that price movement of any one security in a portfolio
will affect the overall return of the portfolio. |
| Self-Directed
Investments |
|
A
401(k) participant has the right and responsibility to instruct
the plan administrator how his or her portfolio should be invested.
|
| Small
Cap Stock |
|
A
stock with a total market capitalization less than $1 billion.
|
| Specialty
Funds |
|
Funds
that focus on a small part of the market, seeking to add higher
returns than core funds. By definition, specialty funds are
less diversified and more risky than core funds. |
| Speculators
|
|
Individuals
or institutions that invest hoping to make large profits in
short periods of time. Like gamblers, speculators accept the
prospect of loss, and they lose big from time to time, in order
to reap extraordinary profits. In this book, the distinction
is made between investors (who seek long-term rewards with a
high level of risk control) and speculators. |
| Standard
& Poor's Composite U.S.Index of 500 stocks (S&P 500)
|
|
The
Standard & Poor's Composite Index of 500 stocks is
the most popular of the stock market indexes among professional
investors. The S&P 500 index consists of 500 stocks chosen
for market size, liquidity and industry group representation.
It is a market value weighted index (stock price times number
of shares outstanding), with each stock's weight in the index
proportionate to its market value. |
| Standard
Deviation |
|
Standard
deviation calculates the average annual return of an investment
and measures how much the returns fluctuate around the average.
It is a measurement of the volatility of an investment and is
often considered the risk of an investment. |
| Stock
|
|
Financial
instruments —securities—that give the purchaser an
ownership interest in a company. Stocks are also called equity
or equity securities. |
| Stock
Exchanges |
|
An
organization that provides facilities and systems to trade stocks.
In the U.S. stocks are traded on the New York Stock Exchange,
American Stocks Exchange, NASDAQ, and other regional exchanges.
|
| Stock
Options |
|
Stock
options provide the investor with the right, but not the obligation,
to purchase shares of stock at some date in the future for a
specific price. |
| Stock
Purchase Plans |
|
A
company-sponsored plan that allows employees to purchase shares—sometimes
at a discount. The plan may be qualified by the IRS and tax
deferred (e.g., part of a 401(k) plan) or available as an aftertax
benefit. |
| Style |
|
An
investment strategy that focuses on specific characteristics
of securities in which the portfolio manager invests. Most common
investment styles are growth and value stock investing. |
|
Synthetic
GICs |
|
A
form of investment contract where the assets are held by the
plan sponsor, usually at one financial institution, while the
account's benefit responsive guarantee is provided by another
insurance company or financial institution. |
| |
|
|
T |
| Tactical
Asset Allocation Fund |
|
An
aggressive investment strategy where portfolio managers attempt
to time the market by moving the allocation of the fund from
100 percent stocks to 100 percent bonds and cash. |
| |
|
|
U |
| U.S.
Treasury Bill |
|
A
debt obligation issued by the U.S. government that will be have
a maturity date of one year or less. Treasury Bills are also
called T-Bills and are used as the benchmark for cash or the
risk-free return. |
| U.S.
Treasury Bond |
|
A
debt obligation of the U.S. government that will be have a maturity
date of seven years or longer when issued. |
| U.S.
Treasury Note |
|
A
debt obligation of the U.S. government that will be have a maturity
date of one to 10 years when issued. |
