A portfolio is a collection of investments, such as stocks, bonds and ETFs.
A stock is a claim on part of a corporation’s assets and earnings. Businesses raise capital by issuing stock.
A bond is debt issued by a corporation or a government to finance activities. Bond holders are creditors who are entitled to be repaid with interest on a specified date.
Indexes, like the S&P 500, measure the value of a group of stocks, bonds or other assets.
Exchange-traded funds (ETFs) are securities designed to track the performance of other market measures, such as an index. ETFs can hold hundreds — or thousands — of stocks and bonds.
Securities are financial instruments that hold some type of monetary value. For example, they can represent ownership in a publicly-traded company (such as a stock) or a creditor relationship with a corporation or government (such as a bond).
A contribution is any amount of money that’s deposited into your retirement account.
A distribution is a withdrawal from your retirement account. Distributions could subject you to taxes and early withdrawal penalties depending on the type of IRA.
An Individual Retirement Account (IRA) is a type of investment account that may offer certain tax advantages for individuals looking to invest for the purpose of saving for retirement.
Roth IRA contributions are not tax deductible. Your earnings, however, can be distributed tax- and penalty-free in retirement if you meet the applicable requirements.
Traditional IRA contributions may be tax deductible depending on your individual circumstances. You can also defer the taxes on earnings until you withdraw funds in retirement.
A Simplified Employee Pension (SEP) IRA is similar to a Traditional IRA, with a few key differences. It allows you to potentially make larger contributions, but you must be self-employed or be an employer contributing to employee accounts.