Vocabulary

• Asset – Something valuable an individual, corporation or country owns with the expectation that it will provide future benefit.
• Liability – A financial obligation, debt, claim or potential loss.
• Income – The money that an individual or business receives in exchange for providing a good or service or through investing capital.
• Expense – The cost of goods, services, or assets purchased.
• Budget – An estimate of income and expenditure for a set period of time.
• Savings – The portion of disposable income not spent on consumption of goods and services.
• Investment – The action or process of investing money for profit.
• Interest – The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
• Principal – The original sum of money borrowed in a loan, or put into an investment.
• Credit – The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
• Debt – Money that is owed or due.
• Equity – The value of an asset after all liabilities or debts have been paid.
• Mortgage – A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
• Retirement Plan – A financial arrangement designed to replace employment income upon retirement.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Financial Risk – The possibility of losing money on an investment or business venture.
• Diversification – The process of allocating capital in a way that reduces exposure to any one particular asset or risk.
• Inflation – The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Deflation – Reduction of the general level of prices in an economy.
• Bankruptcy – Legal status of a person or other entity that cannot repay the debts it owes to creditors.
• Credit Score – A numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of that person.
• Financial Advisor – A professional who provides financial services to clients.
• 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.
• Net Worth – The total assets minus total outside liabilities of an individual or a company.
• Fixed Income – A type of investing or budgeting style for which real return rates or periodic income is received at regular intervals and at reasonably predictable levels.
• Compound Interest – The addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.
• 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 security that involves a collection of securities—such as stocks—that often tracks an underlying index.
• Bonds – A debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time.
• Stocks – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
• Dividends – A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
• Capital Gain – An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
• Capital Loss – The loss incurred when a capital asset decreases in value.
• Annuity – A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.
• IRA – An Individual Retirement Account is a type of savings account that is designed to help you create a healthy nest egg for your retirement while enjoying tax advantages.
• 401(k) – A retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out.
• Pension – A retirement plan that requires an employer to make contributions into a pool of funds set aside for a worker's future benefit.
• Liquidity – The availability of liquid assets to a market or company.
• Portfolio – A range of investments held by a person or organization.
• Real Estate – Property consisting of land or buildings.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Hedge – An investment to reduce the risk of adverse price movements in an asset.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• 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 financial derivatives that represents a contract sold by one party to another.
• Derivative – A financial security with a value that is reliant upon or derived from, an underlying asset or group of assets.
• Commodities – Basic goods used in commerce that are interchangeable with other goods of the same type.
• Cryptocurrency – A digital or virtual form of currency that uses cryptography for security.