Financial Glossary

A tax-advantaged retirement savings plan offered by employers that allows employees to contribute a portion of their salary before taxes. Many employers offer matching contributions up to a certain percentage.

A mortgage with an interest rate that adjusts periodically based on market conditions. Initial rates are typically lower than fixed-rate mortgages but can increase over time.

A measure of an investment's performance compared to a benchmark index. Positive alpha indicates outperformance, negative alpha indicates underperformance. Represents the value added by active management.

The process of paying off debt through regular payments over time. Each payment covers both principal and interest, with the interest portion decreasing and principal portion increasing over the loan term.

A yearly charge for maintaining a credit card account. Premium rewards cards typically have higher annual fees ($95-$550) while many basic cards have no annual fee.

The yearly cost of borrowing money, including interest and fees, expressed as a percentage. APR provides a complete picture of loan costs beyond just the interest rate.

The real rate of return earned on an investment, taking into account the effect of compounding interest. APY is typically higher than the stated interest rate.

A financial product that provides a guaranteed income stream, typically used for retirement. You pay a lump sum or series of payments, and receive regular payments for a specified period or for life.

A professional evaluation of a property's market value, typically required by lenders before approving a mortgage. Based on factors like location, condition, and comparable sales.

The lowest price a seller is willing to accept for a security. Also called the offer price. The difference between ask and bid price is called the spread.

Anything of value that an individual or company owns, such as cash, investments, real estate, or personal property. Assets are the foundation of building wealth.

An investment strategy that balances risk and reward by dividing investments among different asset categories, such as stocks, bonds, and cash, based on goals and risk tolerance.

Someone given permission to use another person's credit card account. The account appears on the authorized user's credit report but the primary cardholder remains responsible for all charges.

The amount you can still charge on a credit card, calculated as credit limit minus current balance and pending transactions. Using all available credit hurts credit utilization ratio.

Moving debt from one credit card to another, typically to take advantage of a lower interest rate. Often includes a balance transfer fee of 3-5% of the transferred amount.

A fee charged for transferring debt from one credit card to another, typically 3-5% of the transferred amount. A $5,000 transfer with a 3% fee costs $150.

A legal proceeding for individuals or businesses unable to repay their debts. Chapter 7 liquidates assets, while Chapter 13 restructures debt into a repayment plan.

A market condition where prices are falling or expected to fall by 20% or more from recent highs, typically accompanied by widespread pessimism and negative investor sentiment.

A standard index or portfolio used to measure investment performance. Common benchmarks include the S&P 500 for large-cap stocks and the Bloomberg Aggregate Bond Index for bonds.

A person or entity designated to receive assets from a trust, insurance policy, retirement account, or will after the owner's death.

A measure of a stock's volatility relative to the overall market. A beta of 1 means the stock moves with the market, above 1 means more volatile, below 1 means less volatile.

The highest price a buyer is willing to pay for a security. The difference between the bid and ask price represents the spread, which is a transaction cost.

The period between credit card statements, typically 28-31 days. Purchases made during this cycle appear on the next statement and are due 21-25 days after the statement closing date.

Stock in a large, well-established, and financially sound company with a history of reliable performance. Examples include Apple, Microsoft, and Johnson & Johnson.

A fixed-income investment where an investor loans money to an entity (government or corporation) that borrows the funds for a defined period at a fixed interest rate.

The net asset value of a company, calculated as total assets minus intangible assets and liabilities. Used to calculate the price-to-book (P/B) ratio for stock valuation.

A licensed individual or firm that buys and sells securities on behalf of investors. Brokers execute trades and may provide investment advice for a fee or commission.

A financial plan that outlines expected income and expenses over a specific period. Creating and following a budget is essential for managing money and achieving financial goals.

A market condition characterized by rising prices and investor optimism. Typically defined as a 20% or more increase from recent lows in major market indexes.

A card designed for business expenses with higher credit limits, employee cards, and expense tracking. Builds business credit separately from personal credit in some cases.

A contract giving the buyer the right (but not obligation) to purchase a stock at a specified price within a specific timeframe. Used for speculation or hedging strategies.

The profit realized from selling an asset for more than its purchase price. Capital gains can be short-term (held less than a year) or long-term (held more than a year), with different tax implications.

A loss incurred when selling an asset for less than its purchase price. Capital losses can offset capital gains to reduce tax liability.

The 3-4 digit security code on the back of credit cards used for online and phone transactions. Provides additional fraud protection by confirming physical card possession.

Borrowing cash using a credit card at an ATM or bank. Typically charges a higher APR (25%+), immediate interest (no grace period), and a cash advance fee of 3-5%.

A fee charged for withdrawing cash using a credit card, typically $10 or 3-5% of the advance amount, whichever is greater. A $200 cash advance with 5% fee costs $10.

The net amount of cash moving in and out of your accounts. Positive cash flow means you're earning more than you're spending, while negative cash flow indicates you're spending more than you earn.

A credit card reward that returns a percentage of purchases as cash. Common rates are 1-2% on all purchases, with higher rates (3-5%) on specific categories like gas or groceries.

A savings product offered by banks that pays a fixed interest rate for a specified term. CDs typically offer higher rates than savings accounts but require you to lock up your money for the term.

A card requiring full balance payment each month with no preset spending limit. Late payments result in fees and restrictions. American Express offers several charge cards.

A forced transaction reversal initiated by the cardholder's bank, typically for fraud, billing errors, or failure to deliver goods/services. Protects consumers but can be abused.

Fees and expenses paid at the closing of a real estate transaction, typically 2-5% of the purchase price. Includes appraisal, title insurance, attorney fees, and loan origination.

Consolidated Omnibus Budget Reconciliation Act allows workers to continue employer-sponsored health insurance after leaving a job, typically for up to 18 months, at their own expense.

Basic goods used in commerce that are interchangeable with other goods of the same type. Examples include gold, oil, wheat, and natural gas. Traded on commodity exchanges.

Interest calculated on both the initial principal and accumulated interest from previous periods. Often called 'interest on interest,' it's a powerful force for growing wealth over time.

Tap-to-pay technology using Near Field Communication (NFC) for quick, secure transactions. Same security as chip cards with one-time encrypted codes. Limits typically $50-250 per transaction.

A fixed amount you pay for a covered healthcare service, typically due at the time of service. For example, $25 for a doctor visit or $10 for a prescription.

The original purchase price of an asset, used to calculate capital gains or losses for tax purposes. Adjusted for stock splits, dividends, and return of capital.

An options strategy where an investor sells call options on stocks they already own. Generates income from premiums but limits upside potential if the stock rises above the strike price.

The legal contract outlining terms, fees, APR, and cardholder responsibilities. Required by law to be provided before account opening and with significant changes.

Money owed on credit cards that carries over from month to month, accruing interest. The average American household carries over $6,000 in credit card debt at 20%+ APR.

Rewards earned on credit card purchases that can be redeemed for travel, merchandise, gift cards, or statement credits. Value varies by card but typically 1 point = 1 cent.

The maximum amount you can charge on a credit card. Determined by credit score, income, and payment history. Exceeding this limit may result in over-limit fees or declined transactions.

A numerical representation (typically 300-850) of your creditworthiness based on your credit history. Higher scores indicate lower credit risk and can lead to better loan terms.

The ratio of your current credit card balances to your credit limits, expressed as a percentage. Keeping utilization below 30% is recommended for maintaining a good credit score.

The daily interest rate on a credit card, calculated by dividing the APR by 365. A 20% APR equals approximately 0.055% daily. Used to calculate interest on carried balances.

The practice of buying and selling securities within the same trading day. Highly risky and requires significant capital, knowledge, and time. Most day traders lose money.

A debt repayment strategy where you pay minimum payments on all debts, then put extra money toward the debt with the highest interest rate. Saves the most money on interest.

A debt repayment strategy where you pay off debts from smallest to largest balance, regardless of interest rate. Provides psychological wins that motivate continued progress.

The percentage of your gross monthly income that goes toward paying debts. Lenders use DTI to assess your ability to manage monthly payments and repay borrowed money.

The amount you must pay out-of-pocket before your insurance coverage begins. Higher deductibles typically result in lower premium costs.

Financial contracts whose value is derived from an underlying asset, such as stocks, bonds, commodities, or currencies. Includes options, futures, and swaps.

Insurance that provides income replacement if you become unable to work due to illness or injury. Can be short-term (3-6 months) or long-term (until retirement age).

A risk management strategy that mixes different types of investments within a portfolio. The goal is to reduce exposure to any single asset or risk.

A portion of a company's earnings distributed to shareholders, typically paid quarterly. Dividends provide a steady income stream in addition to potential stock price appreciation.

An S&P 500 company that has increased its dividend for at least 25 consecutive years. Indicates financial stability and commitment to shareholders. Examples include Coca-Cola and Johnson & Johnson.

Annual dividend payment divided by the stock price, expressed as a percentage. A 5% dividend yield means the stock pays $5 annually for every $100 invested.

An investment strategy where you invest a fixed amount regularly, regardless of market conditions. Reduces the impact of market volatility by buying more shares when prices are low.

An upfront payment made when purchasing a large item, typically expressed as a percentage of the total cost. Common for home purchases (usually 3-20%) and auto loans.

The date by which the minimum payment must be received to avoid late fees and maintain grace period. Typically 21-25 days after statement closing date, as required by law.

A company's net profit divided by the number of outstanding shares. Used to measure profitability and calculate the P/E ratio. Higher EPS generally indicates better profitability.

A savings buffer designed to cover 3-6 months of living expenses in case of job loss, medical emergency, or other unexpected financial setback. Essential for financial security.

Economies in developing countries with rapid growth potential but higher risk. Examples include China, India, Brazil, and South Africa. Offer higher potential returns with greater volatility.

An embedded microchip in credit cards providing enhanced security through encrypted, one-time transaction codes. Chip cards must be inserted rather than swiped during payment.

The value of ownership in an asset after debts are subtracted. In real estate, it's the property value minus what you owe. In stocks, it represents ownership shares in a company.

A financial arrangement where a third party holds and regulates payment of funds required for two parties in a transaction. Commonly used in real estate transactions and mortgage payments.

The process of arranging how your assets will be distributed after death and making healthcare decisions if you become incapacitated. Includes wills, trusts, and powers of attorney.

An investment fund that trades on stock exchanges, holding assets like stocks, commodities, or bonds. ETFs offer diversification and typically have lower fees than mutual funds.

An unsecured debt security that tracks an index, commodity, or strategy. Similar to ETFs but structured as debt, not equity. Subject to issuer credit risk.

A person named in a will to manage the deceased's estate, pay debts and taxes, and distribute assets to beneficiaries according to the will's instructions.

The annual fee that all funds or ETFs charge their shareholders, expressed as a percentage of assets. Lower expense ratios mean more of your money is invested rather than going to fees.

A credit card benefit that extends manufacturer warranties by 1-2 years on items purchased with the card. Coverage typically mirrors the original warranty terms.

The most widely used credit score model, ranging from 300 to 850. Created by Fair Isaac Corporation, it's used by lenders to evaluate credit risk.

A person or organization legally obligated to act in your best financial interests. Financial advisors who are fiduciaries must prioritize your needs over their own profit.

The total cost of credit, including interest and fees. Calculated based on average daily balance and APR. Avoided entirely by paying statement balance in full each month.

A mortgage where the interest rate remains constant throughout the loan term, providing predictable monthly payments. Most common terms are 15 and 30 years.

A temporary pause or reduction in loan payments granted by a lender during financial hardship. Interest typically continues to accrue, increasing the total amount owed.

A legal process where a lender takes ownership of a property when the borrower fails to make mortgage payments. Can severely damage credit and result in losing the home.

A fee charged for purchases made in foreign currencies or with foreign merchants, typically 1-3% of the transaction. Many travel cards waive this fee.

Credit card security features that detect suspicious activity and provide zero liability for unauthorized charges. Federal law limits cardholder liability to $50, but most issuers offer $0 liability.

The percentage of gross monthly income that goes toward housing costs (mortgage, insurance, taxes). Lenders typically prefer this ratio to be below 28%.

Evaluating a stock by examining financial statements, management, competitive advantages, and economic factors to determine intrinsic value. Contrasts with technical analysis.

An agreement to buy or sell an asset at a predetermined price on a specific future date. Commonly used for commodities, currencies, and stock indices. Requires margin account.

A period after a payment due date during which you can pay without penalty. Credit cards typically offer 21-25 days; student loans often offer 6 months after graduation.

Total income earned before taxes and deductions. For individuals, it includes wages, tips, investment income, and other earnings.

Stock in a company expected to grow earnings faster than the market average. Typically reinvests profits rather than paying dividends. Higher potential returns but more volatile.

A credit check performed when applying for credit cards or loans that appears on your credit report and may temporarily lower credit score by 5-10 points. Multiple inquiries within 30 days count as one for credit cards.

A tax-advantaged account for individuals with high-deductible health plans to save for medical expenses. Contributions are tax-deductible, and withdrawals for qualified expenses are tax-free.

An investment fund that pools capital from accredited investors and employs diverse strategies to generate returns. Typically requires high minimum investments and charges substantial fees.

A revolving credit line secured by your home equity. You can borrow, repay, and borrow again up to your credit limit, typically with variable interest rates.

The portion of your home that you truly own, calculated as the property's market value minus what you owe on your mortgage. Builds over time through mortgage payments and property appreciation.

A type of mutual fund or ETF designed to track the performance of a specific market index, like the S&P 500. Known for low fees and passive management strategy.

The rate at which the general level of prices for goods and services rises, reducing purchasing power. Central banks attempt to limit inflation to keep economies running smoothly.

When a private company first sells shares to the public. Allows companies to raise capital but subjects them to regulatory requirements and public scrutiny. Can be highly volatile initially.

Trading securities based on material, non-public information. Illegal when done by corporate insiders or those who receive tips. Legal when insiders trade using publicly available information.

Organizations that invest on behalf of others, including pension funds, mutual funds, insurance companies, and endowments. Control majority of stock market trading volume.

The percentage charged by a lender for borrowing money, or earned on savings and investments. Can be fixed or variable depending on the financial product.

A promotional interest rate offered to new cardholders, often 0% for 12-21 months on purchases or balance transfers. Reverts to standard APR after the intro period ends.

A tax-advantaged retirement savings account that individuals can open independently. Traditional IRAs offer tax-deductible contributions, while Roth IRAs offer tax-free withdrawals in retirement.

The bank or financial institution that provides the credit card and extends credit. Major issuers include Chase, American Express, Citi, Capital One, and Bank of America.

Specific expenses that can be deducted from taxable income, including mortgage interest, charitable donations, and medical expenses. Must exceed the standard deduction to be beneficial.

A bank or investment account owned by two or more people, where each owner has full access to funds. Common for married couples but comes with shared liability.

Stock in a company with market capitalization over $10 billion. Generally more stable and less volatile than small-cap stocks. Examples include Apple, Microsoft, and Amazon.

A penalty charged when the minimum payment isn't received by the due date. Can be up to $41 for repeated late payments. Also triggers penalty APR and damages credit score.

A financial obligation or debt owed to another party. Liabilities include mortgages, auto loans, credit card debt, and student loans.

A legal claim against property for unpaid debts. Must be satisfied before the property can be sold. Common types include tax liens, mechanic's liens, and judgment liens.

Insurance that pays a death benefit to beneficiaries when the insured person dies. Types include term life (temporary coverage) and permanent life (lifetime coverage with cash value).

An order to buy or sell a stock at a specific price or better. Provides price control but may not execute if the price isn't reached. Contrasts with market orders.

How quickly and easily an asset can be converted to cash without significantly affecting its value. Cash is the most liquid asset, while real estate is relatively illiquid.

How easily an asset can be bought or sold without significantly affecting its price. Stocks with high trading volume are highly liquid; real estate is relatively illiquid.

The ratio of a loan amount to the appraised value of the property, expressed as a percentage. Lower LTV ratios typically result in better loan terms and may avoid PMI requirements.

Insurance covering services not typically covered by health insurance, such as assistance with daily activities, nursing home care, or in-home care for elderly or chronically ill individuals.

Borrowed money from a broker to purchase securities. Amplifies both gains and losses. Requires a margin account and maintaining minimum equity levels to avoid margin calls.

A broker's demand for additional funds when a margin account falls below the required minimum value. If not met, the broker can sell securities to cover the shortfall.

The tax rate applied to your last dollar of income. In the US progressive tax system, different portions of income are taxed at different rates.

The total market value of a company's outstanding shares, calculated by multiplying share price by number of shares. Categories include small-cap, mid-cap, and large-cap.

An order to buy or sell a stock immediately at the best available current price. Guarantees execution but not price. Contrasts with limit orders that specify price.

The degree of price fluctuation in financial markets. High volatility means large price swings, indicating uncertainty or risk. Measured by the VIX (Volatility Index).

The smallest amount you must pay each month to keep the account in good standing, typically 1-3% of the balance or $25-35, whichever is greater. Paying only the minimum results in expensive long-term interest.

Digital payment apps like Apple Pay, Google Pay, or Samsung Pay that store credit card information for contactless smartphone payments. Uses tokenization for enhanced security.

A savings account that typically offers higher interest rates than regular savings accounts but requires higher minimum balances. May include limited check-writing privileges.

A loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments over a set term (typically 15-30 years) until the loan is paid off.

An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities, professionally managed by a fund manager.

Income remaining after all deductions, taxes, and expenses are subtracted from gross income. Also called take-home pay for individuals or net profit for businesses.

The total value of your assets minus your liabilities. A key measure of financial health that should ideally increase over time as you build wealth.

The payment processing system that facilitates credit card transactions. The four major networks are Visa, Mastercard, American Express, and Discover.

The value of the next best alternative foregone when making a decision. For example, money spent on a vacation could have been invested to earn returns.

Contracts giving the right, but not obligation, to buy (call) or sell (put) an asset at a set price before expiration. Used for speculation, hedging, or income generation.

A fee charged when spending exceeds the credit limit. Now rare due to 2009 CARD Act requiring opt-in for over-limit transactions. Typically $25-35 if applicable.

A higher interest rate (up to 29.99%) applied when you make late payments or violate card terms. Can apply indefinitely until six consecutive on-time payments are made.

Low-priced stocks (typically under $5) of small companies, often traded over-the-counter. Highly speculative and risky due to low liquidity, volatility, and potential for fraud.

A retirement plan funded by an employer that provides regular payments to employees after retirement. Increasingly rare in private sector, more common in government jobs.

Insurance required by lenders when down payment is less than 20% of home value. Protects the lender if you default, typically costs 0.5-1% of loan amount annually.

Upfront fees paid to lenders to reduce the interest rate on a mortgage. One point equals 1% of the loan amount and typically reduces the rate by about 0.25%.

A collection of financial investments like stocks, bonds, mutual funds, ETFs, and other assets. Diversifying your portfolio helps manage risk.

A conditional commitment from a lender stating how much you can borrow for a home, based on verified financial information. Stronger than pre-qualification and preferred by sellers.

A credit card offer based on a soft credit inquiry that doesn't affect credit score. Not a guarantee of approval, which requires a hard inquiry and full application.

The amount paid for an insurance policy, typically monthly, quarterly, or annually. Premium costs vary based on coverage amount, deductible, and risk factors.

Stock price divided by earnings per share. Measures how much investors pay for each dollar of earnings. High P/E suggests growth expectations; low P/E may indicate value.

The person who applied for the credit card and is legally responsible for all charges, including those made by authorized users. Account appears on their credit report.

The original amount of money borrowed in a loan or invested, excluding interest. As you make loan payments, a portion goes toward reducing the principal.

A credit card benefit that covers theft or damage to items purchased with the card, typically for 90-120 days. Coverage limits vary by card, often $500-$10,000 per claim.

A contract giving the buyer the right to sell a stock at a specified price within a specific timeframe. Used to profit from price declines or protect against losses.

The process of realigning the weightings of assets in a portfolio to maintain your desired asset allocation. Typically done annually or when allocations drift significantly.

Replacing an existing loan with a new one, typically to get better terms such as a lower interest rate, different loan term, or to access home equity.

A company that owns, operates, or finances income-producing real estate. Allows investors to earn real estate income without buying property directly. Must pay 90% of income as dividends.

The minimum amount you must withdraw annually from traditional retirement accounts starting at age 73. Failure to take RMDs results in a 50% penalty on the amount not withdrawn.

A measure of investment profitability, calculated as (gain minus cost) divided by cost, expressed as a percentage. A $1,000 investment returning $1,200 has a 20% ROI.

A fee charged when a payment bounces due to insufficient funds in your bank account. Typically $25-40 and may also trigger late fees and penalty APR.

A loan for homeowners 62+ that converts home equity into cash without requiring monthly payments. Loan is repaid when you sell the home, move out, or pass away.

A credit card incentive system offering cashback, points, or miles for purchases. Value varies by redemption method, with travel typically offering the highest value per point.

Your ability and willingness to lose some or all of your original investment in exchange for potentially greater returns. Depends on factors like age, income, and financial goals.

Bonus rewards categories that change quarterly, offering higher cashback (typically 5%) on specific spending like gas, groceries, or restaurants. Requires activation each quarter.

A retirement account where contributions are made with after-tax dollars, but qualified withdrawals in retirement are tax-free. Particularly beneficial for younger investors.

A stock market index tracking the 500 largest US companies. Widely used as a benchmark for the overall stock market and the basis for many index funds.

A group of companies in the same industry or business area. The 11 stock market sectors include technology, healthcare, financials, energy, and consumer goods.

A credit card requiring a refundable security deposit that serves as the credit limit. Designed for building or rebuilding credit. Deposit returned when upgrading to unsecured card or closing account.

Tradable financial assets including stocks, bonds, options, and mutual funds. Regulated by the SEC (Securities and Exchange Commission) to protect investors.

Simplified Employee Pension IRA designed for self-employed individuals and small business owners. Allows higher contribution limits than traditional IRAs, up to 25% of compensation.

A measure of risk-adjusted return, calculated as excess return divided by standard deviation. Higher Sharpe ratios indicate better returns relative to risk taken.

Selling a home for less than the mortgage balance with lender approval. Alternative to foreclosure but still negatively impacts credit score. Lender may forgive the difference.

Borrowing shares to sell, hoping to buy them back at a lower price for profit. Highly risky as losses can be unlimited if the stock price rises instead of falls.

Rewards earned for opening a new credit card and meeting spending requirements within a specified time. Common bonuses include 50,000-100,000 points worth $500-$1,000+ in travel.

Stock in a company with market capitalization between $300 million and $2 billion. Generally more volatile than large-cap stocks but with higher growth potential.

A minimum spending amount required within a timeframe (typically $3,000-$5,000 in 3 months) to earn a sign-up bonus. Excludes balance transfers, cash advances, and fees.

The difference between the bid price (what buyers will pay) and ask price (what sellers want). Narrower spreads indicate higher liquidity and lower transaction costs.

A fixed dollar amount that reduces taxable income, available to all taxpayers. For 2024: $14,600 for single filers, $29,200 for married filing jointly.

The total amount owed on a credit card at the end of the billing cycle. Paying this amount in full by the due date avoids interest charges and maximizes the grace period.

The last day of the billing cycle when your statement is generated. Charges after this date appear on the next statement. Payment is typically due 21-25 days after closing.

A share of ownership in a company. When you buy stock, you become a partial owner with potential to earn money through price appreciation and dividends.

When a company divides existing shares into multiple shares, reducing the price proportionally. A 2-for-1 split gives shareholders two shares at half the price. Doesn't change total value.

An order to sell a stock when it reaches a specific price, limiting potential losses. Becomes a market order when triggered, so execution price isn't guaranteed.

A credit card only usable at a specific retailer or group of retailers. Often offers discounts and rewards but typically has higher APRs (25-30%) than general-purpose cards.

The range of income subject to a certain income tax rate in the progressive US tax system. Higher income levels are taxed at higher rates (marginal tax rates).

A dollar-for-dollar reduction in taxes owed. More valuable than deductions, which only reduce taxable income. Examples include Child Tax Credit and Earned Income Tax Credit.

An expense that can be subtracted from gross income to reduce taxable income. Common deductions include mortgage interest, student loan interest, and charitable contributions.

Evaluating stocks by analyzing price charts, trading volume, and patterns to predict future movements. Based on the belief that historical patterns repeat. Contrasts with fundamental analysis.

Life insurance that provides coverage for a specific period (term), typically 10, 20, or 30 years. More affordable than whole life insurance but has no cash value.

A unique series of letters assigned to a security for trading purposes. For example, AAPL for Apple, MSFT for Microsoft. Used to identify stocks on exchanges.

Insurance that protects against financial loss from defects in a property's title, such as unknown liens, ownership disputes, or errors in public records. Paid once at closing.

Investment performance including both price appreciation and income (dividends or interest). A stock rising 8% with 2% dividends has a 10% total return.

A retirement account with tax-deductible contributions (if eligible) and tax-deferred growth. Withdrawals in retirement are taxed as ordinary income. RMDs required at age 73.

Credit card benefits covering trip cancellation, delay, lost luggage, and emergency medical expenses when travel is purchased with the card. Coverage varies widely by card tier.

Airline or hotel loyalty points earned through credit card spending. Typically 1-3 miles per dollar spent, with bonus miles on travel purchases. Can be redeemed for flights, hotels, or upgrades.

A long-term (20-30 year) debt security issued by the US government. Considered one of the safest investments, pays interest semi-annually. Used to benchmark other interest rates.

Additional liability coverage beyond standard home and auto insurance limits. Protects assets in case of major claims or lawsuits. Typically provides $1-5 million in coverage.

The process lenders use to evaluate loan applications, assessing creditworthiness, income, assets, and debt. Determines approval, loan amount, and interest rate.

A now-rare practice where credit card issuers raised APR based on late payments to other creditors. The 2009 CARD Act severely restricted this practice.

Stock trading below its intrinsic value based on fundamentals. Often established companies with low P/E ratios and steady dividends. Contrasts with growth stocks.

An interest rate that fluctuates based on an index, typically the prime rate. When the Federal Reserve raises rates, variable APRs increase, and vice versa.

The process by which an employee earns the right to employer contributions to retirement accounts over time. Common vesting schedules include immediate, graded, or cliff vesting.

A measure of expected market volatility based on S&P 500 options prices. Often called the 'fear index.' High VIX indicates investor uncertainty and expected turbulence.

A tax form employers send to employees and the IRS reporting annual wages and tax withholdings. Required to file income taxes and verify employment income.

Permanent life insurance providing lifetime coverage with a cash value component that grows over time. More expensive than term life but builds savings and offers guaranteed death benefit.

A legal document specifying how assets should be distributed after death and naming guardians for minor children. Must go through probate court to be executed.

The income return on an investment, expressed as a percentage. For bonds, it's the interest payment divided by the price. For stocks, it's the annual dividend divided by the stock price.

A fraud protection policy ensuring cardholders aren't responsible for unauthorized charges. Federal law caps liability at $50, but most issuers offer complete zero liability protection.