A
- 401(k) Plan
- A workplace retirement account that lets employees set aside part of each paycheck — usually before income tax is taken out — and often receive matching contributions from the employer. The money grows tax-deferred until it is withdrawn in retirement.
- 403(b) Plan
- A retirement savings plan that works similarly to a 401(k) but is offered by public schools, hospitals, churches, and other tax-exempt organizations.
- Annuity
- A contract with an insurance company that converts a lump sum or series of payments into a stream of income — sometimes guaranteed for life — generally used to round out retirement income.
- Asset Allocation
- How a portfolio is divided across categories such as stocks, bonds, real estate, and cash. The right mix depends on goals, time horizon, and risk tolerance, and it is often the single biggest driver of long-term results.
B
- Beneficiary
- The person, trust, or organization named to receive an account, policy, or asset after the owner's death.
- Bond
- A loan you make to a government, municipality, or corporation. The issuer agrees to pay interest on a schedule and return the principal at maturity.
- Bear / Bull Market
- Common labels for market direction. A bear market refers to a sustained decline (often 20% or more), while a bull market refers to a sustained rise.
C
- Capital Gain (or Loss)
- The profit (or loss) you realize when you sell an asset for more (or less) than you paid. How long you held the asset can change how it is taxed.
- Cash Flow
- The money moving into and out of your household or business — paychecks, distributions, expenses, debt payments. Healthy cash flow is the foundation of any financial plan.
- Compound Interest
- Interest earned on both your original deposit and on interest that has already been added. The longer money compounds, the more dramatic the growth.
D
- Defined Benefit Plan
- A traditional pension that promises a specific monthly payment in retirement, calculated using a formula based on salary and years of service.
- Defined Contribution Plan
- A retirement account (such as a 401(k)) where the contribution is defined, but the eventual balance depends on contributions plus investment performance.
- Diversification
- Spreading investments across many holdings and asset types so a setback in any one of them has only a modest impact on the overall portfolio.
- Dividend
- A share of a company's earnings paid out to its shareholders, typically on a quarterly schedule.
- Dollar-Cost Averaging
- Investing the same dollar amount on a regular schedule, regardless of price. Over time this averages out the purchase price and removes the urge to time the market.
E
- Estate Planning
- The process of arranging in advance how your assets, dependents, and personal affairs will be handled if you become incapacitated or pass away. Wills, trusts, beneficiaries, and powers of attorney are core tools.
- Exchange-Traded Fund (ETF)
- A basket of investments — often hundreds or thousands of holdings — that trades on an exchange like a single stock. ETFs typically have lower costs and are widely used to build diversified portfolios.
F
- Fiduciary
- A standard of care, not a title. An advisor acting under a fiduciary standard is legally required to put the client's interests ahead of their own.
- Fixed Income
- Investments that pay a set or contractual rate of interest, such as bonds, CDs, and certain annuities. Used in portfolios to provide stability and predictable income.
G
- Growth Stock
- A share of a company expected to grow earnings faster than the broader market. Growth stocks often pay smaller dividends and tend to be more volatile.
H
- Health Savings Account (HSA)
- A tax-advantaged account paired with a qualifying high-deductible health plan. Contributions, growth, and qualified medical withdrawals are all tax-free — making the HSA one of the most efficient savings vehicles available.
I
- Index Fund
- A mutual fund or ETF that tracks a specific market index (such as the S&P 500) instead of trying to outperform it. Costs tend to be very low.
- Inflation
- The general rise in the cost of goods and services over time. A retirement plan that ignores inflation usually underestimates how much income will be needed later in life.
- Individual Retirement Account (IRA)
- A personal retirement account with tax advantages. Traditional IRAs typically offer up-front tax deductions; Roth IRAs offer tax-free withdrawals later.
L
- Liquidity
- How quickly an asset can be turned into cash without losing meaningful value. Checking accounts are highly liquid; real estate is not.
- Long-Term Care Insurance
- A policy that helps cover the cost of extended personal care — at home, in assisted living, or in a nursing facility — which is generally not covered by Medicare.
M
- Mutual Fund
- A pooled investment that buys a portfolio of stocks, bonds, or other holdings on behalf of many investors. Priced once per day at market close.
N
- Net Worth
- The difference between what you own (assets) and what you owe (liabilities). Tracking it over time is one of the simplest measures of financial progress.
P
- Probate
- The court-supervised process of validating a will and distributing a deceased person's assets. Probate is public, can be slow, and is often avoided through proper trust and beneficiary planning.
R
- Required Minimum Distribution (RMD)
- The minimum amount that the IRS requires you to withdraw each year from most tax-deferred retirement accounts beginning at a specified age.
- Risk Tolerance
- How much short-term swing in account value you can stomach without changing course. It is shaped by goals, time horizon, experience, and personality.
- Roth IRA
- A retirement account funded with after-tax dollars. Qualified withdrawals — including all growth — are tax-free in retirement.
S
- Social Security
- A federal program that provides retirement, survivor, and disability benefits based on lifetime earnings. The age you claim significantly affects the size of your monthly check.
- Stock
- A share of ownership in a public company. Stockholders benefit when the company grows and may receive dividends.
T
- Tax-Loss Harvesting
- Selling an investment at a loss in a taxable account to offset taxable gains elsewhere — a tool used to reduce the tax drag on long-term investing.
- Term Life Insurance
- Life insurance that covers a defined period (typically 10 to 30 years). It is the simplest and usually most affordable way to protect dependents during working years.
- Trust
- A legal arrangement where a trustee manages assets on behalf of named beneficiaries. Trusts can protect privacy, avoid probate, and direct how and when wealth is passed on.
V
- Volatility
- The size and frequency of price swings in an investment. High-volatility holdings can deliver higher long-term returns but require a strong stomach in the short term.
W
- Will
- A legal document that names guardians for minor children, an executor, and the people or organizations who should receive your assets when you die.
Y
- Yield
- The income an investment produces, expressed as a percentage of its price — for example, a bond yielding 4% pays $40 per year on every $1,000 of price.