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Financial Literacy - Emergency fund
TOOLS AND RESOURCES
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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