Vocabulary

• Financial Planning – The process of managing your financial resources to meet your life goals.
• Investment – The process of putting money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit.
• Compound Interest – Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.
• Risk Management – The process of identifying, assessing, and controlling threats to an organization's capital and earnings.
• Emergency Fund – A stash of money set aside to cover the financial surprises life throws your way.
• Budget – An estimation of revenue and expenses over a specified future period of time.
• Diversification – A risk management strategy that involves spreading investments around to reduce risk.
• Debt – Money that is owed or due.
• Savings Account – A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
• Retirement Plan – Financial strategies of saving, investment, and ultimately distribution of money meant to sustain oneself during retirement.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.
• Tax Planning – The analysis of a financial situation or plan from a tax perspective.
• Inflation – The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Fixed Expenses – Cost that does not change from period to period or that changes only very slightly.
• Variable Expenses – Costs that can change over time and are not fixed.
• Passive Income – Earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.
• Annuity – A series of equal payments at regular intervals, such as weekly, monthly, or yearly.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• Stock – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
• Bond – A fixed income instrument that represents a loan made by an investor to a borrower.
• ETFs (Exchange-Traded Funds) – A type of investment fund and exchange-traded product, traded on stock exchanges.
• Dividend – A payment made by a corporation to its shareholders.
• Capital Gain – The increase in the value of an investment or real estate that gives it a higher worth than the purchase price.
• Liquidity – The ability to quickly convert an investment into cash with little to no loss in value.
• Asset Allocation – The process of deciding where to put money to work in various types of investment categories.
• Bull Market – A market condition in which the prices of securities are rising or are expected to rise.
• Bear Market – A condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining.
• Blue-Chip Stocks – Shares in large, well-known companies with a history of sound financial performance.
• Market Volatility – The rate at which the price of an asset increases or decreases for a set of returns.
• Recession – A significant decline in activity across the economy, lasting longer than a few months.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
• Mortgage – A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.
• Credit Score – A statistical number that evaluates a consumer's creditworthiness.
• Interest Rate – The amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.
• Pension Plan – A retirement plan that requires an employer to make contributions to a pool of funds set aside for a worker's future benefit.
• 401(k) Plan – A retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out.
• IRA (Individual Retirement Account) – An investing tool used by individuals to earn and earmark funds for retirement savings.
• Roth IRA – An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year.
• Social Security – A government system that provides monetary assistance to people with an inadequate or no income.
• Estate Planning – The preparation of tasks that serve to manage an individual's asset base in the event of their incapacitation or death.
• Trust Fund – A fund consisting of assets belonging to a trust, held by the trustees for the beneficiaries.
• Net Worth – The value of all assets, minus the total of all liabilities.
• Capital Loss – The decrease in the value of an investment or real estate that gives it a lower worth than the purchase price.
• FICO Score – A type of credit score created by the Fair Isaac Corporation.
• Portfolio – A range of investments held by a person or organization.
• Dollar Cost Averaging – The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price.
• Amortization – The process of gradually writing off the initial cost of an asset.
• Treasury Bonds – A government debt security with a maturity of more than 10 years.
• Commodities – A raw material or primary agricultural product that can be bought and sold.
• Credit Report – A detailed report of an individual's credit history prepared by a credit bureau.