Vocabulary

• Debt – An amount of money borrowed by one party from another.
• Credit – A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at a later date.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
• Principal – The original sum of money borrowed in a loan, or put into an investment.
• Loan Term – The amount of time that a borrower agrees to pay back a loan to the lender.
• Credit Score – A statistical number that evaluates a consumer's creditworthiness.
• Budget – An estimate of income and expenditure for a set period of time.
• Savings – The portion of income not spent on current expenditures.
• Investment – The action or process of investing money for profit or material result.
• Financial Planning – The task of determining how a business will afford to achieve its strategic goals and objectives.
• Retirement – The action or fact of leaving one's job and ceasing to work.
• Bankruptcy – A legal proceeding involving a person or business that is unable to repay outstanding debts.
• Emergency Fund – A stash of money set aside to cover the financial surprises life throws your way.
• Mortgage – A loan secured by real property through the use of a mortgage note.
• Credit Card – A small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit.
• Asset – A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.
• Liability – A company's legal financial debts or obligations that arise during the course of business operations.
• Equity – The ownership interest of investors in a business, including shareholders of a corporation.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
• Income – Money received, especially on a regular basis, for work or through investments.
• Expense – The cost required for something; the money spent on something.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Pension – A regular payment made by the state to people of or above the official retirement age and to some widows and disabled people.
• Annuity – A fixed sum of money paid to someone each year, typically for the rest of their life.
• Financial Independence – The status of having enough income to pay one's living expenses for the rest of one's life without having to be employed or dependent on others.
• Diversification – The strategy of investing in a variety of securities in order to lower risk.
• Risk – The potential of gaining or losing something of value.
• Inflation – The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Deflation – A decrease in the general price level of goods and services.
• Recession – A period of temporary economic decline during which trade and industrial activity are reduced.
• Bull Market – A market in which share prices are rising, encouraging buying.
• Bear Market – A market in which prices are falling, encouraging selling.
• Stock – The capital raised by a business or corporation through the issue and subscription of shares.
• Bond – A fixed income instrument that represents a loan made by an investor to a borrower.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• ETF – An exchange-traded fund (ETF) is a type of investment fund and exchange-traded product.
• Real Estate – Property consisting of land or buildings.
• Depreciation – A reduction in the value of an asset with the passage of time, due in particular to wear and tear.
• Appreciation – An increase in the value of an asset over time.
• Dividend – A sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits.
• Capital Gains – A profit from the sale of property or of an investment.
• Liquidity – The availability of liquid assets to a market or company.
• Leverage – The use of borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.
• Hedging – Making an investment to reduce the risk of adverse price movements in an asset.
• Arbitrage – The simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
• Forex – The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies.
• Short Selling – The sale of a security that is not owned by the seller, or that the seller has borrowed.
• Margin – Borrowing money from a broker to purchase stock.
• Futures Contract – A legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.
• Option – A contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date.