Financial Glossary

A retirement savings plan sponsored by an employer that allows employees to save and invest for their retirement on a tax-deferred basis.

The process of paying off a debt over time through regular payments that cover both principal and interest.

The yearly cost of a loan including interest and fees, expressed as a percentage of the loan amount.

Anything of value that an individual or company owns, such as cash, investments, real estate, or personal property.

Interest calculated on the initial principal and accumulated interest from previous periods, allowing investments to grow exponentially over time.

A numerical representation of creditworthiness, typically ranging from 300 to 850, used by lenders to assess lending risk.

A percentage that compares monthly debt payments to gross monthly income, used to assess borrowing capacity.

An investment strategy that spreads risk by allocating investments across various financial instruments, industries, and categories.

A savings account set aside for unexpected expenses or financial emergencies, typically covering 3-6 months of living expenses.

The difference between the market value of a property and the outstanding balance of all liens on the property.

A neutral third party that holds funds or documents until specific conditions are met in a transaction.

An interest rate that remains constant throughout the life of a loan or investment.

Total income before taxes and other deductions are subtracted.

The rate at which the general level of prices for goods and services rises, reducing purchasing power over time.

A financial obligation or debt that an individual or company owes to another party.

How quickly and easily an asset can be converted into cash without significantly affecting its market price.

A loan used to purchase real estate, where the property serves as collateral for the loan.

The total value of assets minus total liabilities, representing an individual's or company's financial position.

A collection of investments held by an individual or institution, including stocks, bonds, mutual funds, and other securities.

The amount paid for an insurance policy, typically on a monthly, quarterly, or annual basis.

The original amount of money borrowed in a loan or invested, excluding interest or returns.

The process of replacing an existing loan with a new loan, typically to obtain better terms or lower interest rates.

A measure of investment efficiency, calculated as the gain or loss relative to the initial investment amount.

An investor's ability and willingness to lose some or all of their investment in exchange for greater potential returns.

Life insurance that provides coverage for a specific period, typically 10, 20, or 30 years.

An interest rate that can change over time based on market conditions or an underlying benchmark rate.

The process by which an employee gains ownership rights to employer-provided benefits, such as 401(k) matching contributions.

The income return on an investment, typically expressed as an annual percentage based on the investment's cost or current market value.