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Financial Literacy - Emergency fund
Emergency fund toolkit
Calculators, work sheets and lots of strategies for improving your savings.
Creating an emergency fund

Glossary of emergency fund savings terms

10. Passbook savings account -- Liquid account, providing FDIC insurance to $100,000 per person ($250,000 on retirement accounts), that generally offers low or no minimum balance requirements, fewer fees and a low rate of interest. The account may or may not have restrictions on number of transactions, and provides the consumer with a booklet that has each deposit and withdrawal stamped inside it at the time of each in-branch transaction.

11. Roth IRA -- An alternative to a traditional IRA. The most notable thing about a Roth is earnings withdrawals are tax-free if the account has been open for at least five years and you're at least 59 1/2 when you start to withdraw money. Contributions to a Roth are not tax deductible. The Roth is named for Sen. William Roth, Jr., former chairman of the Senate Finance Committee.

12. Short-term bond fund -- A mutual fund made up of short to intermediate-term bonds with maturities of three to five years.

13. S&P no-load index fund -- a mutual fund comprised of the stocks that make up the Standard & Poor's 500. Load refers to the sales fee.

14. Standard & Poor's 500 -- a benchmark for the overall U.S. stock market comprised of 500 large-cap stocks. Many index funds attempt to match the performance of the S&P 500 by holding the same stocks in the same proportions.

15. Subprime mortgage -- A mortgage granted to a borrower considered subprime, that is, a person with a less-than-perfect credit report. Subprime borrowers have either missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default.

16. Tax-free money market mutual fund -- Usually purchased through brokerage houses, they invest in short-term debt instruments issued by tax-exempt entities at the federal level, and sometimes at the state and local levels. Earnings are not taxed on a federal level, though they may be subject to tax at a state and local level.

17. Yield curve -- A yield curve is a graph that shows the relationship between yields and maturity dates. Under normal circumstances, the longer it takes for a CD, bond or other investment to mature, the greater the yield, because people demand a greater return to tie up their money for a longer time. When the difference in rates between a short-term investment and a long-term one is reduced, the yield curve flattens. When economic forces cause a shorter maturity to produce a greater yield than a long maturity, the yield curve is said to be inverted.

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-- Posted: July 23, 2007
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