100 Essential Investing & Personal Finance Terms: A Comprehensive Glossary

A retirement savings plan sponsored by employers allowing employees to save and invest a portion of their paycheck before taxes are taken out. Learn more about 401(k)s in our detailed guide on 401(k) accounts.

A tax-advantaged savings plan designed to encourage saving for future education costs.

The process of dividing investments among different asset categories like stocks, bonds, and cash.

A period when stock prices are falling, typically by 20% or more, indicating widespread pessimism.

A period when stock prices are rising or are expected to rise, indicating investor confidence.

The profit made from selling an asset like stocks or real estate for more than its purchase price.

Interest calculated on the initial principal and also on the accumulated interest from previous periods. Einstein once called it the eighth wonder of the world, highlighting just how powerful it can be. Try our investment calculator to see the power of compound interest in action!

A risk management strategy that mixes a wide variety of investments within a portfolio.

A portion of a company's earnings distributed to shareholders, usually in cash or additional stock. Learn more about generating passive income through dividends in our guide to dividend investing.

Investing a fixed amount of money at regular intervals, regardless of the asset's price, to reduce the impact of volatility.

Savings set aside to cover unexpected expenses or financial emergencies. 3-6 months of expenses is recommended.

A type of investment fund that is traded on stock exchanges, much like stocks. Instead of investing in one company, an ETF spreads your money across many different ones, helping to reduce risk.

The annual fee that mutual funds or ETFs charge their shareholders, expressed as a percentage of assets.

An individual or organization legally obligated to act in the best interest of another party.

A professional who provides financial services and advice to clients.

The total value of goods produced and services provided in a country during one year.

A type of mutual fund or ETF designed to replicate the performance of a specific market index.

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

A tax-advantaged account that individuals use to save and invest for retirement.

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage.

The ease with which an asset can be converted into cash without affecting its market price.

An investment vehicle that pools money from many investors to purchase a diversified portfolio of securities.

The value of all assets minus the total of all liabilities.

A range of investments held by an individual or institution.

A period of temporary economic decline, typically identified by a fall in GDP in two successive quarters.

A measure used to evaluate the efficiency of an investment, calculated by dividing net profit by the initial cost.

An investor's ability or willingness to endure market volatility and potential losses.

A type of IRA where contributions are made after-tax, but qualified withdrawals are tax-free.

A type of security that signifies ownership in a corporation and represents a claim on part of the company's assets and earnings.

The length of time over which an investment is expected to be held before being liquidated.

The degree of variation of a trading price series over time, indicating the level of risk.

The income return on an investment, such as the interest or dividends received.

A fixed-income instrument representing a loan made by an investor to a borrower, typically corporate or governmental.

A numerical expression representing the creditworthiness of an individual, based on credit history.

A personal finance measure comparing an individual's monthly debt payment to their monthly gross income.

The value of an ownership interest in property, including shareholders' equity in a business.

The total amount of money being transferred into and out of a business or account.

A savings certificate with a fixed maturity date and specified interest rate.

A measure of the average change over time in the prices paid by urban consumers for a basket of goods and services.

A decrease in the general price level of goods and services.

The reduction in value of an asset over time.

The central bank of the United States, which regulates the U.S. money supply and monetary policy.

A home loan with an interest rate that remains constant throughout the term.

An interest rate that changes periodically based on a reference rate.

Total earnings before deductions like taxes and retirement contributions.

A statistical measure of change in a securities market (e.g., S&P 500, Dow Jones).

An investment designed to protect against the decreasing purchasing power of money.

The first sale of stock by a private company to the public.

The use of borrowed capital to increase the potential return of an investment.

The total value of a company's outstanding shares.

A type of investment that is secured by a mortgage or collection of mortgages.

Financial instruments that give investors the right, but not the obligation, to buy or sell a stock at a set price.

Earnings derived from investments rather than active work.

A valuation ratio comparing a company's share price to its earnings per share.

A type of stock that gives shareholders priority in dividends over common stockholders.

Adjusting the asset allocation in a portfolio to maintain a target mix.

A government security with a maturity of more than 10 years.

An investment strategy focusing on undervalued stocks.

Professional financial services offered to high-net-worth individuals.

A bond that pays no interest but is traded at a discount to its face value.