Glossary

Annual percentage rate, including interest and certain loan costs.

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Annual percentage yield, reflecting compounding on deposits.

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The annual fund fee shown as a percentage of invested assets.

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Spreading money across assets to reduce concentration risk.

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How quickly an asset can be converted into cash without large price impact.

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Annual percentage rate. The yearly cost of borrowing, including interest and required upfront fees.

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Annual percentage yield. The total yearly return earned on deposits, taking into account compounding.

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The percentage of total available revolving credit that you are currently using.

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The window between a credit card statement closing date and payment due date when no interest accrues on new purchases if paid in full.

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Moving debt from one credit card or loan account to another, typically to take advantage of a temporary 0% APR promotion.

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Your total monthly debt payments divided by your gross monthly income, used by lenders to evaluate borrowing capacity.

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An upfront fee charged by a lender to process, underwrite, and disburse a new loan.

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Upfront fees paid to a mortgage lender at closing in exchange for a lower interest rate over the loan term.

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A financial account managed by a third party to collect and pay property taxes and home insurance on behalf of a homeowner.

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The annual operating cost of a mutual fund or ETF expressed as a percentage of total assets.

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An exchange-traded fund that holds a basket of stocks, bonds, or commodities and trades on exchanges throughout the day.

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A pooled investment vehicle managed by a fund company that prices and executes trades once daily at market close.

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A low-cost mutual fund or ETF designed to track the performance of a specific market index like the S&P 500.

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Liquid cash reserved in a safe, accessible account to cover unexpected expenses or income disruption.

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The schedule of paying off a debt through regular structured payments split between principal and interest over time.

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Interest calculated on the initial principal as well as all accumulated interest from previous periods.

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The taxable profit earned when an asset such as stock or real estate is sold for a higher price than its purchase price.

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A distribution of a portion of a company's earnings paid out to eligible shareholders.

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A general and sustained increase in prices across an economy that erodes the purchasing power of money.

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Replacing an existing loan or mortgage with a new one under different terms, interest rates, or duration.

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A credit card backed by a cash security deposit that serves as the cardholder's credit limit.

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A person added to another individual's credit card account who gets a card and credit building benefits without primary legal liability.

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A declaration by a creditor that a delinquent debt is unlikely to be collected, though the debt remains legally owed.

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Negotiating with creditors to pay a lump sum that is less than the full balance owed to settle delinquent debt.

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Restricting access to your credit report to prevent new accounts from being opened in your name without authorization.

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A service that tracks your credit report activity and alerts you to changes, inquiries, or potential identity theft.

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The most widely used credit scoring model created by Fair Isaac Corporation, ranging from 300 to 850.

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A credit scoring model created jointly by the three major credit bureaus (Equifax, Experian, TransUnion).

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A bank deposit account that pays interest and often offers check-writing abilities, insured by the FDIC or NCUA.

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A bank service that links a savings account or line of credit to prevent declined transactions when checking balance is insufficient.

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An electronic method of transferring funds directly from one person or entity to another through banking networks.

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Automated Clearing House transfer. An electronic network used for direct deposits, bill payments, and bank-to-bank transfers in the US.

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A standard international banking code used to identify specific financial institutions during international wire transfers.

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A banking system where banks hold only a fraction of customer deposits in reserve and lend out the remainder.

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Price-to-earnings ratio. A valuation metric comparing a company's stock price to its per-share earnings.

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An order to buy or sell a security immediately at the current best available market price.

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An order to buy or sell a security at a specified price or better.

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Selling a borrowed security with the expectation that its price will decline, allowing it to be bought back cheaper for a profit.

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A brokerage account that lets investors borrow funds from the broker to buy securities using existing holdings as collateral.

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A financial derivative giving the holder the right, but not obligation, to buy or sell an asset at a set price within a specific timeframe.

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A measure of a stock's volatility relative to the overall market benchmark.

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A measure of an investment portfolio's performance relative to a benchmark index after adjusting for risk.

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A risk-adjusted return metric calculating average return earned in excess of the risk-free rate per unit of volatility.

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Real Estate Investment Trust. A company that owns, operates, or finances income-producing real estate and trades on public exchanges.

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The rate of return an investor receives on a bond, including coupon payments relative to the bond's current price.

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A graph plotting interest rates of bonds of equal credit quality across different maturity dates.

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An investment strategy of allocating fixed dollar amounts into assets at regular intervals regardless of share price.

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An individual who signs a loan agreement alongside the primary borrower, legally agreeing to repay the debt if the primary borrower defaults.

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An asset pledged by a borrower as security for a loan, which the lender can seize if payments are missed.

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A temporary postponement or reduction of loan payments granted by a lender during times of financial hardship.

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A period during which loan payments are temporarily paused, during which federal student loan interest may be subsidized.

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The benchmark interest rate banks charge their most creditworthy corporate customers.

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Secured Overnight Financing Rate. A benchmark interest rate used for dollar-denominated derivatives and loans, replacing LIBOR.

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An expense that reduces your taxable income, lowering the amount of income subject to tax.

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A dollar-for-dollar reduction in the actual amount of income tax you owe.

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A fixed dollar amount set by the IRS that reduces taxable income for taxpayers who do not itemize expenses.

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Eligible individual expenses (mortgage interest, state taxes, charitable gifts) listed on tax returns instead of the standard deduction.

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An official IRS tax form provided by employers showing employee earnings and taxes withheld for the year.

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An IRS tax document used to report non-employee income such as freelance pay, dividends, interest, or property sales.

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Quarterly tax payments made by self-employed individuals and investors whose income is not subject to employer withholding.

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Selling underperforming investments at a loss to offset taxable capital gains from winning investments.

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The recurring payment required to keep an insurance policy active.

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The initial out-of-pocket amount a policyholder must pay before insurance coverage pays a claim.

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A fixed out-of-pocket fee paid by an insured individual for a covered healthcare service at the time of service.

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The percentage of covered medical costs paid by the insured person after reaching the annual deductible.

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Extra liability insurance coverage that goes beyond the limits of standard home, auto, or watercraft policies.

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Insurance that replaces a portion of income if an injury or illness prevents you from working.

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The total monetary value of all finished goods and services produced within a country during a specific time period.

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A measure that tracks changes in the price level of a market basket of consumer goods and services.

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A decrease in the general price level of goods and services, leading to an increase in purchasing power.

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A significant, widespread downturn in economic activity lasting more than a few months, typically defined as two consecutive quarters of negative GDP growth.

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An economic condition characterized by slow economic growth, high unemployment, and high inflation simultaneously.

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Government spending and tax policies used to influence economic conditions.

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Actions taken by a central bank (such as the Federal Reserve) to manage interest rates and money supply.

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The potential loss of gain from alternative choices when one alternative is chosen over others.

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The mandatory minimum amount that must be withdrawn annually from traditional IRAs and 401(k)s starting at age 73.

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An additional elective contribution allowed for taxpayers aged 50 and older into retirement plans like IRAs and 401(k)s.

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The process by which an employee earns full ownership of employer-contributed funds in a retirement plan over time.

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A financial contract issued by an insurance company that converts a lump sum into guaranteed income payments for a specified term or life.

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A federal social insurance program providing retirement, disability, and survivor benefits funded through payroll taxes.

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Capitalization rate. Net operating income divided by current market value of a real estate property, measuring potential return.

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Annual pre-tax cash flow of a real estate property divided by the total initial cash invested.

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An increase in the monetary value of an asset such as real estate or stocks over time.

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The market value of a homeowner's unencumbered interest in their property (home value minus remaining mortgage balance).

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Indemnity insurance that protects mortgage lenders and homebuyers from financial loss due to defects in a property title.

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