D.27 Characteristics, uses and taxation of investment vehicles Flashcards

A pooled investment vehicle that collects money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities, managed by a professional fund manager.

A type of investment fund that trades on stock exchanges like individual stocks, offering diversification with lower expense ratios than mutual funds.

Taxable accounts are subject to capital gains and dividend taxes, while tax-advantaged accounts (e.g., IRAs, 401(k)s) offer tax deferral or tax-free growth.

A tax on the profit from the sale of investments; short-term gains (held <1 year) are taxed as ordinary income, while long-term gains (held >1 year) have lower rates.

Qualified dividends are taxed at long-term capital gains rates, while non-qualified dividends are taxed as ordinary income.

A company that owns, operates, or finances income-producing real estate and is required to distribute at least 90% of its taxable income to shareholders.

A contract with an insurance company that provides periodic payments, typically for retirement, with tax-deferred growth until withdrawal.

Debt securities issued by state and local governments, often providing tax-free interest income at the federal and sometimes state level.

A Roth IRA offers tax-free withdrawals in retirement with after-tax contributions, while a Traditional IRA allows tax-deductible contributions with taxable withdrawals.