Investing

401(K) Match

An employer contribution made to their employees' 401(k) plan based on individual employee's contributions

Asset Allocation

Dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash

Asset Class

A group of financial instruments which have similar financial characteristics and behave similarly in the marketplace (like stocks, bonds, and cash)

Bear Market

A market in which prices are falling, encouraging selling.

Bond

A security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond's maturity date

Bond Rating

A measurement of the likelihood that a bondholder will be paid back

Brokerage Account

An account that lets individual investors trade stocks, bonds, mutual funds, and other investments

Bull Market

A market in which there is increased stock trading and rising stock prices

Capital Gain

Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for

Capital Gains Tax

A tax levied on profit from the sale of property or an investment

Compound Interest

Reinvesting earned interest back into the principal to allow money to grow exponentially over time

Coupon

The annual interest payment on a bond, usually expressed as a percentage of its face value

Diversification

The practice of investing in a large variety of stocks, bonds, and/or funds as a way to as a way to reduce your overall risk

Dividend

Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis

Dollar Cost Averaging

The practice of putting a fixed amount into an investment over a period of time, regardless of the price of that investment

Exchange-Traded Fund (ETF)

A collection of stocks and/or bonds that are traded on securities exchanges. Unlike mutual funds, they can be traded throughout the day like an individual stock.

Index Fund

A low-fee portfolio of stocks chosen to track or mimic a stock market index, thereby removing the human element of investing because no one is choosing the individual stocks

Individual Retirement Account (IRA)

An investing tool for individuals to earmark funds specifically for their retirement

Inflation

The rate at which the price of goods increases and consumer purchasing power decreases over time

Investing

The process of setting money aside to increase wealth over time for long-term financial goals such as retirement

Insider Trading

The illegal act of trading a company's stock using information that is not available to the public

Market Capitalization

Market value of a company's outstanding shares calculated by multiplying the current share price by number of shares outstanding

Micro-Investing Platform

An application that allows users to regularly save small sums of money

Municipal Bond

A bond, often having tax advantages for individual investors, issued by a state or local government which typically uses the loan to pay for public works to benefit its citizens

Mutual Fund

A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor

Nasdaq

The second largest stock exchange in the world behind the NYSE

New York Stock Exchange (NYSE)

The world's largest stock exchange, physically located in New York City

Nominal Rate of Return

The rate of return that does not account for inflation or taxes

Pension

A retirement account, offered in some job sectors or companies, that an employer maintains to give an employee a fixed payout at retirement

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs

Rate Of Return

The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)

Real Rate of Return

The rate of return that accounts for inflation and taxes

Risk

Degree of uncertainty on how likely the investor is to make money on an investment

Robo-Advisor

An online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners

Roth IRA

An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year

Security

A financial asset, such as a stock or a bond, that can be bought and sold in a financial market

S&P 500

An index of 500 large cap companies chosen based on their size, industry, and other factors, used to represent the entire market

Social Security

A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals

Stock

A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company

Stock Exchange

A market where shares in corporations are bought and sold through an organized system

Target Date Fund (TDF)

A type of investment fund that rebalances its asset mix over time based on a projected retirement year

Treasury Bond

A bond, generally considered to be a risk-free investment, issued by the U.S. Treasury with a maturity of more than 10 years

Traditional 401(k) Plan

A retirement savings plan, sponsored through your employer who will often match your contributions, that allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn

Traditional IRA

An individual retirement account that allows a person to set aside pre-tax income up to a specified amount each year