| ACH | Automated Clearing House is an electronic funds-transfer system that facilitates payments in the U.S. e.g. with payroll, direct deposit, tax refunds, consumer bills, tax payments, etc. in the U.S. |
| APR | The Annual Percentage Rate is the effective percentage that the borrower pays per year in interest and fees for the loan. It is a simple interest rate that does not take into account the compounding of interest. E.g. Used for loans, credit cards etc. |
| APY | The Annual Percentage Yield is the actual rate of return earned in one year if the interest is compounded. E.g. Used for a certificate of deposit (CD), a share of stock, a government bond etc. |
| Back-end load | The fee imposed by some funds when shares are redeemed (sold). |
| Capital gain | An increase in the value of an investment i.e. the difference between the net purchase price and the net sales price. |
| Capital loss | A loss in the value of an investment i.e. the difference between the net purchase price and the net sales price. |
| Capital preservation | The investment goal to maintain the initial invested amount from decreasing in value. |
| Capitalization | The total market value of a company’s outstanding equity. |
| Compounding | The cumulative effect of an investment’s earnings being reinvested and generating additional earnings of their own. |
| Diversification | Investing in a variety of asset classes and securities with varying risk profiles. |
| Dividend | Money paid to stockholders by an investment fund or company, usually from profits. |
| DJIA | The Dow Jones Industrial Average is a widely followed price-weighted index of 30 of the largest and most widely held U.S. stocks. |
| Emerging market | Economies in the process of growth and industrialization i.e. developing markets such as Africa, Asia, Eastern Europe, the Far East, Latin America, and the Middle East may have significant growth potential in the future. Investing in emerging markets can provide both significant rewards and significant risks. |
| Equity | A security or investment that represents ownership in a company. The terms equity and stock are frequently used interchangeably. In contrast, a bond represents a loan to a borrower. |
| ETF | An Exchange-Traded Fund is a basket of securities that you can buy or sell through a brokerage firm on a stock exchange. Each ETF has a buying and selling price on the stock exchange and can be traded more easily than an index fund. |
| FDIC | The Federal Deposit Insurance Corporation is a federal agency responsible for insuring deposits in member banks and thrift institutions. |
| Fiduciary | Any individual or entity with discretionary authority or control over the management of a plan or the disposition of its assets. A fiduciary has the authority to provide investment advice for a fee. A fiduciary also has discretionary authority over the plan’s administration. |
| FINRA | The Financial Industry Regulatory Authority is a self-regulation organization for brokerage firms operating in the United States. FINRA is governed by the Securities and Exchange Commission of the United States (SEC). The Financial Industry Regulatory Authority (FINRA) protects investors and ensures market integrity. |
| FIRE | Financial Independence, Retire Early is a movement where the goal is to attain enough wealth to retire early through a combination of a very high savings rate and a frugal lifestyle. |
| Fixed income fund | A fixed-income fund primarily invests in bonds and other fixed-income securities to provide current income to shareholders. |
| Front-end load | A sales charge on mutual funds at the time of purchase. |
| Growth fund | A fund that invests primarily in the stocks of companies with higher-than-average risk in exchange for potentially higher-than-average returns. These companies frequently pay little or no dividends, and their stock prices fluctuate the most from day-to-day. |
| Income fund | A fund whose primary goal is to generate current income rather than capital appreciation |
| Index fund | An investment fund that seeks to replicate the performance of a specific stock market or bond market index e.g. S&P500. Often referred to as passively managed investments. |
| Inflation | The overall increasing price trend of products and services in an economy. Inflation is one of the most significant long-term hazards for investors because it reduces the buying power of their investments. |
| International fund | A fund that predominantly invests in the securities of firms based outside of the United States. Or whose income is derived from sources elsewhere than the United States. |
| Investment adviser | A professional who is employed by an investment fund or an individual to provide professional advice on investments and asset management methods. |
| Investment return | The percentage gain or loss on an investment over a specific time period. Income and capital gains or losses are factored into the investment return calculation. |
| Large-cap fund | A fund that invests primarily stocks of companies with large market capitalization. |
| Large-cap stocks | Large caps are often well-established corporations, so their stocks have less risk than smaller caps, but they also provide less opportunity for rapid development. |
| Lifecycle fund | A fund that offers variable degrees of long-term appreciation and capital preservation based on your age or projected retirement date. As you approach older or closer to retirement, the asset mix of a lifecycle fund shifts away from growth and toward income. Also referred to as target-date retirement funds or age-based funds. |
| Management fee | A fee or charge paid to an investment manager for his or her services and usually included in the TER. |
| Money market fund | A mutual fund that invests in short-term, high-quality fixed-income securities. Money market funds seek the best level of income while maintaining capital. |
| MSCI ACWI | The Morgan Stanley Capital International All Country World Index comprises the stocks of nearly 3,000 companies from 23 developed countries and 25 emerging markets and is a market capitalization-weighted index that is designed to measure the performance of large-cap and mid-cap stocks in global developed and emerging markets |
| Mutual fund | |
| NASDAQ-100 Index | An index that includes 100 of the largest (based on market capitalization) domestic and international non-financial securities listed on the Nasdaq Stock Market |
| NAV | The Net Asset Value is the daily net dollar value of a single investment fund share or unit calculated by the fund. |
| No-load fund | A mutual fund that does not charge a sales commission on its shares. |
| NYSE | The New York Stock Exchange is the oldest and largest stock exchange in the United States. The NYSE was founded in 1792. |
| P/E ratio | The price of a stock is divided by trailing 12-month earnings per share. |
| Passive management | The strategy of managing a fund in a passive or non-active way, with the purpose of tracking an index. Passive management funds, sometimes known as index funds, are distinct from actively managed investment funds. |
| Rate of return | The gain or loss on an investment over time, usually annually. |
| Real rate of return | The gain or loss on an investment over time is adjusted for inflation. |
| Redemption | The sale of the fund shares back to the fund. |
| Return | The profit or loss from an investment. A positive return denotes a profit, whereas a negative return denotes a loss. |
| Risk tolerance | The capacity and willingness of an investor to lose some or all of an investment in exchange for higher future profits. |
| S&P 500 Index | The Standard & Poor’s 500 Index is a passively managed market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies. |
| Security | A broad phrase covering stocks, bonds, mutual funds, and other types of assets. |
| Share | A representation of ownership in a corporation or investment fund. |
| TER | The Total Expense Ratio is an annual fee charged by an asset management firm to investors to cover the costs of running the fund. |
| Term Life Insurance | Term life insurance provides coverage for a specific period of time, typically ranging from one to thirty years. If the insured person dies during the term of the policy, the insurance company pays a death benefit to the beneficiary named in the policy. Term life insurance is typically more affordable than permanent life insurance and is a popular choice for people who want to provide financial security for their loved ones in case they pass away unexpectedly. |
| Ticker symbol | An acronym that uses letters and numbers to identify securities and indexes. |
| Yield | The value of an investment’s interest or dividend payments. The yield is often expressed as a percentage of the investment cost. |
