Financial Planning and Investing Glossary Rutgers NJAES

Conversely, a negative net worth discloses an alarming state of debts outweighing the assets. The net worth is equivalent to the shareholder’s equity value on a firm’s balance sheet.

The total pay from an employer or other sources of income before taxes or deductions are taken out. The percentage that is charged based on the taxable sale.

Contract between a lessor and the lessee that details the agreement for a lessee to use something belonging to the lessor for a specified cost and duration, often a car or property. Amount you will pay out of pocket before your https://quickbooks-payroll.org/ insurance will begin to pay. Funds awarded to a graduate student for part-time teaching or research to assist with expenses related to the degree. For example, a high-risk investment carries with it a high chance of loss.

A type of financial portfolio strategy that involves frequent hands-on strategic intervention — buying and selling assets — from a financial adviser. A state-specific tax-advantaged savings account that allows you to save for college expenses. The Canada Learning Bond , which pays up to $2,000 into the account for qualifying individuals, without any need for you to deposit money. Government grant and incentive programs deposit additional money in the account. You can learn more about guaranteed income certificates and other fixed income investments in Chapter 13 of The Snowman’s Guide to Personal Finance. A 401 plan is a contribution retirement account offered by employers to members of the staff.

A debit card can be used to withdraw cash from an automated teller machine or to make purchases at merchant locations. At the time of use, funds are immediately deducted from the checking or savings account linked to the card. A loan deferment is when a lender agrees that a borrower can pause making monthly loan payments for a set amount of time. The borrower still owes the money and must repay the debt. Deferments are often available with student loans to provide the borrower with a set amount of time before making any payments. Borrowers receive debt counseling when a trained credit counselor reviews their personal finances, debt and credit history to make personalized recommendations to help manage financial challenges. A credit score is a number based on a formula using the information in a person’s credit report.

Financial Glossary: Common Finance Terms

Also known as an HSA, this is a type of savings account with certain tax benefits. You can use your HSAto Glossary Of Personal Finance Terms pay for medical costs such as new glasses. Earning ownership of a present or future asset over time.

• The policy excess is the amount you pay towards a claim.
• CD—A fixed amount of money deposited with a financial institution for a specified amount of time.
• The term general partner refers to all the members of a general partnership, as well as all general partners of a limited partnership.
• Sector breakdown – Breakdown of securities in a portfolio by industry categories.
• Typically, Freddie Mac purchases home mortgage loans from smaller banks and lenders.
• Early availability depends on timing of payor’s payment instructions and fraud prevention restrictions may apply.

See related questions about Credit Reporting Agencies. This makes it easier to achieve your long-term financial goals. The annual percentage rate is what you pay per year to maintain a loan or line of credit; it includes the basic interest rate as well as broker fees and other charges. Credit cards often have multiple interest rates that can be applied to your debt. Refinance — To repay a loan by taking out another loan. Refinancing also resets the the repayment period. A consumer might change a four-year loan to a ten-year loan with lower interest and monthly payments.

Fixed Rate Mortgage

Transfers are sometimes subjected to a Balance Transfer Fee. A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year. See related questions about Savings & Interest-bearing Accounts and Index-linked Certificates of Deposit . The payment history of an account over a specific period of time, including the number of times the account was past due or over limit. DebtsDebt is the practice of borrowing a tangible item, primarily money by an individual, business, or government, from another person, financial institution, or state. However, it excludes all the indirect expenses incurred by the company. Net IncomeNet income for individuals and businesses refers to the amount of money left after subtracting direct and indirect expenses, taxes, and other deductions from their gross income.

In Canada, some GICs are guaranteed by the Canada Deposit Insurance Corporation up to a maximum of $100,000. You can speak with your financial institution or CDIC to learn more about the coverage, given your situation. An early withdrawal is the removal of funds from a fixed-rate investment before the maturity date or from a tax-deferred investment or retirement savings account before a pre-determined time. One example would be a distribution from an individual retirement account taken before age 59½. A small plastic or metal card issued by a financial institution. This card allows the holder to borrow money to purchase goods or services from the creditor, with the promise to pay it back at a later date with interest.

Collected Funds

It is the total of the increase in value and any income received over a given period, expressed as a percentage. A personal pension that is made up solely of the National Insurance rebates, payable by HM Revenue & Customs, where the member has elected to contract out of SERPS or the State Second Pension. The interest rate after the effects of inflation have been taken into account – e.g. interest rates that are high may actually be relatively low in “real” terms if inflation is also very high. In the context of ‘Property’ as a type of asset, investment is usually in commercial property such as offices, shops and industrial premises. Investments such as unit trusts, where a number of people put their money together to enable them to buy a wider range of investments, thereby spreading the risk of volatility. A private pension that you can take from job to job.

Future Value—The amount that a sum of money today will be worth in the future with growth due to compound interest. Expense—Item for which household income is spent, including basic needs, such as housing and utilities, and discretionary purchases, such as entertainment and clothing. Elimination Period—The number of days, starting from the date of an insurable event, before benefits are paid on certain types of insurance policies (e.g., long-term care, disability). Deposit—The addition of money to a financial account.

Fair Debt Collection Practices Act (FDCPA)

A nonprofit financial institution offering a suite of products that typically include checking accounts, savings accounts and loans. This is a Discretionary Managed Account whereby Stash has full authority to manage according to a specific investment mandate. Balance” is defined by investing deposits into underweight assets, and for withdrawals, trimming overweight positions. As you deposit or withdraw funds, your portfolio can slowly be aligned to the target allocation appropriate for your risk profile by additional money movements throughout the year. The investment team at Stash built these portfolios with the goal of optimizing risk-adjusted returns.

• For mutual funds, the expense ratio is the total annual percentage of fees and other costs charged to the fund.
• However, for unsubsidized loans, interest will continue to accrue during the time of deferment.
• With this tool, you essentially trade a loan with another party to obtain a lower interest rate on a loan to get a more favorable interest rate on a foreign loan.
• Richard Barrington has been a Senior Financial Analyst for MoneyRates.
• This can enable shareholders to choose the type of fee structure that best suits their particular needs.
• A service which specializes in working with consumers who are overextended with debts and need to make arrangements with creditors.

It is important to remember that the actual return received could be higher or lower than that shown on the illustration. This is our conventional annuity – please see conventional annuity.

Signature Card

If the price does go down, the investor can buy shares at the lower price and pocket the difference. An online service that offers financial planning and automatic investing operated by algorithm, generally with a much lower fee than a human financial planner. The measure of how a company’s current stock price relates to its current earnings per share. The value in dollars of the total number of shares in a company. A description of the transition from a less conservative asset allocation to a more conservative one as a target-date retirement fund’s retirement year approaches. The US government’s central bank, which is in charge of interest rates, keeping employment rates as high as possible, and controlling inflation.

• An individual or organization that facilitates the buying and selling of assets on someone else’s behalf.
• To document the agreement, you receive a bond, which is similar to an IOU.
• In contrast, “marketable” U.S. government securities, such as U.S.
• A sales charge or load is reflected in the asked or offering price.
• Exchange-traded funds bundle many different investments into a single investment that you can easily buy and sell.

Business professional who analyses the financial consequences of risk. You’ll still see pru.co.uk when you login to our online services. Loan– a type of financial aid that must be repaid, with interest.

Many of the personal finance terms that we’ve listed link to articles and free courses that have been designed to help provide additional detail in a thorough and easy-to-understand presentation. Net Worth — The value of person’s or company’s total assets minus all debts or liabilities. It can be negative if someone owes more than they have in money or other assets. Effective rate – The annual interest rate that is actually earned or paid on an investment, loan or other financial product as the result of compounding over a given time period.

A card on which you load money in advance to spend. While a prepaid card might look like a debit or credit card, there are differences. A debit card is linked to your checking account. When you use a credit card, you’re borrowing money. A prepaid card is not linked to a checking account or credit union share draft account.

Mobile banking

Gifts on which inheritance tax will not be payable unless the donor dies within seven years. If you are over 21 years of age you can select a voluntary excess, in return for a reduction in premium. Your Personal Allowance may be bigger if you claim Blind Person’s Allowance. You may also receive a tax deduction if you are eligible for Marriage Allowance. Earnings on which benefits and contributions in a pension scheme are calculated. The regular income provided by a pension annuity or via flexi-access drawdown.

This is an interest-bearing account for which the bank must reserve the right to require the depositor to provide at least seven days notice of his/her intent to withdraw funds. The ratio of the loan principal to the appraised value . For example, on a $100,000 home, with a mortgage loan principal of $80,000, the loan-to-value ratio is 80 percent. The LTV will affect programs available to the borrower; generally, the lower the LTV, the more favorable the program terms offered by lenders. An index-linked CD is a deposit obligation of the issuing bank and is often sold through bank branches and affiliated and unaffiliated brokers. Index-linked CDs provide the investor the ability to participate in the appreciation, if any, of a particular index, during the term of the CD.

Personal Finance Terms

This directs a standard percentage of each employee’s pay into the plan and allocates it to default investment options unless the employee gives different instructions. These are a common form of defined contribution plan for retirement savings.

• A rewards credit card is one that gives you awards based on the amount you spend using the card.
• Cash equivalent – A short-term money-market instrument, such as a Treasury bill or repurchase agreement, of such high liquidity and safety that it is easily converted into cash.
• The margin interest rates that brokers charge tend to be lower for larger amounts of borrowing.
• PepsiCo, General Electric, and Disney are blue-chip companies.
• A FICO score is a type of credit score presented in three digits which informs creditors about the possibility of a client returning the borrowed money based on their credit history.
• You may also receive a tax deduction if you are eligible for Marriage Allowance.

It will generally add a substantial amount to the cost of a loan over the long run, so comparing interest rates is a central part of shopping for a mortgage. Sometimes a company will increase its number of shares by a given ratio. For example, a 2-for-1 stock split means that each existing share will now be replaced by two shares. This does not generally add to the total market value of an individual’s position because the price generally changes in proportion to the stock split. So, a 2-for-1 stock split is likely to see the stock’s price drop roughly in half. Mutual funds can pursue a variety of investment approaches that are described in a detailed prospectus.

P/B Ratio – The price per share of a stock divided by its book value per share. Mid-cap – The market capitalization of the stocks of companies with market values between $3 to $10 billion. Median Market Cap – The midpoint of market capitalization of the stocks in a portfolio, where half the stocks have higher market capitalization and half have lower. Large-cap – The market capitalization of the stocks of companies with market values greater than $10 billion.