PRODUCTS & FUNDS

Secured loan

A loan backed by collateral the lender can seize (mortgage

Unsecured loan

A loan backed only by your creditworthiness (credit cards). Higher rates.

Revolving credit

Open-ended reusable credit (credit cards

Installment loan

Fixed payments over a set term (auto

Commercial sales finance company

A credit source that buys borrowers' contracts from sellers.

Mortgage

A loan to buy real estate

Fixed-rate mortgage

The rate stays the same for the whole loan.

ARM

Adjustable-Rate Mortgage - fixed for an intro period

PMI

Private Mortgage Insurance - required when the down payment is under 20%; protects the lender.

Amortization

Each payment splits between interest and principal; early payments are mostly interest.

Reverse mortgage

Homeowners 62+ borrow against equity; repaid when they leave the home.

Term life insurance

Pure death benefit for a set term; cheapest; NO cash value.

Whole life insurance

Lifetime coverage plus a cash value that grows tax-deferred.

Universal life insurance

Flexible premiums and death benefit; cash value tied to interest rates.

Variable life insurance

Cash value invested in subaccounts like mutual funds.

Premium

What you pay for an insurance policy.

Death benefit

The payout to a life-insurance beneficiary (generally tax-free).

Cash value

The savings component in permanent life insurance.

Rider

A written change or addition to an insurance policy. Also called endorsement or amendment.

Open-end mutual fund

Unlimited shares created/redeemed daily at NAV; the US standard.

Closed-end fund

A fixed number of shares that trade on an exchange; can trade at a premium or discount to NAV.

ETF

Exchange-Traded Fund - trades all day like a stock but stays near NAV; usually low-cost and tax-efficient.

UIT

Unit Investment Trust - a fixed portfolio with a set termination date.

Hedge fund

A private pool for accredited investors using aggressive strategies; classic 2-and-20 fee.

REIT

A company owning real estate that must distribute 90% of taxable income; trades like a stock.

Mutual fund

A professionally managed

POP

Public Offering Price - NAV plus the sales charge.

Trade date

When an order executes.

Settlement date

When securities and cash actually change hands. Regular-way = T+1.

T+1 settlement

Regular-way stock settlement: one business day after the trade (since May 2024).