12b -1 fee
The 12b-1 fee is the fee that covers the cost of advertising the mutual fund.
Investing Glossary
ADR
The stocks of most foreign companies that trade in the U.S. markets are traded as American Depositary Receipts (ADRs). U.S. depositary banks issue these stocks. Each ADR represents one or more shares of foreign stock or a fraction of a share. If you own an ADR, you have the right to obtain the foreign stock it represents, but U.S. investors usually find it more convenient to own the ADR. The price of an ADR corresponds to the price of the foreign stock in its home market, adjusted to the ratio of the ADRs to foreign company shares.
Annuities
An annuity is a product sold by insurance companies. You pay for the annuity through a lump sum or by making payments over time, then the insurance company invests your money, paying you the residuals at the end of the term. One giant pro is that an annuity has the ability to pay out regular payments each month. These payments could provide a supplemental income during your retirement, even enough to cover your regular expenses. These are complex arrangements orchestrated by an insurance company and as such, come with high fees. Most will have administrative fees, mortality, and expense fees that cover the costs and risks of insuring your money.
APR
The term annual percentage rate of charge, corresponding sometimes to a nominal APR and sometimes to an effective APR, is the interest rate for a whole year, rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc. It is a finance charge expressed as an annual rate
APY
Ask Price
Asset Allocation
Asset allocation refers to the strategy of dividing your investments among different asset categories, such as stocks, bonds, real estate, cash, and cash alternatives. Asset allocation aims to control risk by diversifying an investment portfolio.
Assets
Back End Load
Bear Market
The opposite of a bull market is a bear market, defined as a point in time in which the market is seeing challenges and investor sentiment is on the decline. Just like bull markets, bear markets can span weeks, months, or years.
Beneficiary
This term refers to the individual who inherits the funds or property because of a financial account, trust, or will.
Beta Stocks
Bid Price
Bid-Ask Spread
The amount by which the ask price exceeds the bid price for an asset in the market. The bid-ask spread is essentially the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept.
Bitcoin
Bitcoin is a cryptocurrency. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Blockchain
Blockchain.com is a Bitcoin block explorer service, as well as a cryptocurrency wallet supporting Bitcoin, Bitcoin Cash, and Ethereum. They also provide Bitcoin data charts, stats, and market information
Blue Chip Stock Stability
Blue Chip Stocks
Blue-chip stocks are the term for stocks issued by companies with name recognition that experience consistent growth and usually pay dividends.
Bond
Bond Benefits
Brokerage Account Number
Banks and brokerage firms assign a brokerage account number code for each of your brokerage accounts. This number functions much like a username, and it allows the electronic as well as human interface within your brokerage firm to identify you.
Budget
Budgeting just means establishing a framework for your personal money management that factors in the realities of your financial situation and your unique financial objectives.
Bull Market
A bull market is when the market is doing well and growing at a steady pace. In a bull market, investor sentiment is optimistic and stock prices rise significantly following a previous decline. Bull markets can last several months or even span into years.
Buying Power
Buying power is the amount of money you have available to buy stock. Typically, buying power will match your cash balance, unless you have an outstanding/pending order.
Callability
Callability is the option for some bonds to be paid off prior to maturity. If the bond is paid off before reaching maturity, that usually means the bondholder will get some extra money. Callability can also apply to prefered stocks.
Capital Gain
A capital gain occurs when you sell an investment at a profit. Capital gains can receive favorable tax treatment because the rules generally favor capital gain over ordinary, earned income.
Capital gains are measured by the difference between the amount realized in a sale and the basis on the asset you sold. You pay taxes on the difference.
Clearing Firm
A clearing house is a financial institution formed to facilitate the exchange of payments, securities, or derivatives transactions. The clearing house stands between two clearing firms. Its purpose is to reduce the risk of a member firm failing to honor its trade settlement obligations.
Closing Price
Closing price generally refers to the last price at which a stock trades during a regular trading session. For many U.S. markets, regular trading sessions run from 9:30 a.m. to 4:00 p.m. Eastern Time.
Common Stock
Component of a Market Index
As can be expected, blue-chip stocks are in the major indexes: the S&P 500, the Dow Jones Industrial Average, and the NASDAQ-100.
Compounding Method
Consumer Interest Rates
Convertible Bonds
A convertible bond is a bond that can be turned into a certain number of shares of common stock in the company that issued the bond or in exchange for equal cash value.
Corporate Action
Corporate Bonds
These are bonds put out by commercial undertakings such as corporations and LLCs. Corporate bonds offer high yields but are not favored by the tax code. Upwards of 40% to 50% from corporate bonds may end up going toward taxes.
Coupon
Credit Card Debt
Creditor
A person or company to whom money is owed.
Cryptocurrencies
Current Yield
Cyclical Stock
Day Trading
Debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase
Defensive Stocks
Deferred Load
Discretionary Income
Diversification
The idea behind diversification is that having a variety of investments will yield a greater return while assuming lower risk.
One way to practice diversification is to create your portfolio of stocks. You can do this by investing in companies you believe in, and using a combination of first-hand knowledge on a category, additional research, and insights gleaned from trusted friends and experts.
Public is the first social investing app, which means that its users can see investments made by people in their network and start conversations and learn from the people they trust.
Dividend
The term dividend includes any distribution of property to shareholders to the extent made out of accumulated or current earnings and profits.
Dollar Cost Averaging
DRIP
Emergency Fund
EPS
Earnings per share
Estate Tax
ETF
Executer
The personal representative is whoever is named in the will and/or found themselves appointed by a probate court as the person responsible for realizing the desires of the deceased. This entails clouding out accounts, distributing assets in the manner instructed by the departed, managing paperwork, paying creditors, etc.
Expense Ratio
Extended Hours Trading
Extended-hours trading is stock trading that happens either before or after the trading day of a stock exchange, i.e., pre-market trading or after-hours trading. After-hours trading is the name for buying and selling of securities when the major markets are closed.
FAANG Stocks
FAANG is an acronym referring to the stocks of the five most popular and best-performing American technology companies: Facebook, Amazon, Apple, Netflix and Alphabet (formerly known as Google).
Face Value
Fiduciary
As fiduciaries, investment advisers are required to act in the best interest of their clients and not place their own interests ahead of their clients. The IAA has consistently taken the position that all professionals in the business of providing investment advice about securities to clients should be subject to similar fiduciary principles.
FIFO
First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement cost of goods sold (COGS). The remaining inventory assets are matched to the assets that are most recently purchased or produced.
Financial Literacy
Financial literacy is the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, and investing. Financial literacy helps individuals become self-sufficient so that they can achieve financial stability.
FINRA
In the United States, the Financial Industry Regulatory Authority, Inc. is a private corporation that acts as a self-regulatory organization. FINRA is the successor to the National Association of Securities Dealers, Inc. and the member regulation, enforcement, and arbitration operations of the New York Stock Exchange.
Fixed Expenses
In economics, fixed costs, indirect costs or overheads are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as interest or rents being paid per month, and are often referred to as overhead costs.
Fractional Shares
Front End Load
Full-Service Brokers
A full-service broker is an equivalent of working with an actual stockbroker and therefore provides a more personalized, white-glove experience than basic online brokers. Once you find a full-service brokerage, he or she will take the time to get to know you both personally and financially. The broker will take into account certain factors about your life when crafting a financial plan with objectives that are tailored to your financial realities and life-stage. Full-service brokers can help with other services as well, such as budgeting, retirement planning, and providing general financial advice. Given the high-touch nature of their client relationships, full-service brokers are a more expensive option but can be worth the investment for people who value personalization. Some accounts can be set up for as low as $1,000.
Gain
GFV
Government Bond
These are bonds issued by sovereign governments. They are backed by the full faith and credit of the issuing country, which can take whatever steps necessary to pay off the bond. Governments put out various different types of bonds to finance all sorts of endeavors. Even though government bonds are stable and, as a result, carry lower risk, they often deliver a significant return.
Grantor
This is the person who set up the trust in the first place.
Gross Pay
Gross pay is the amount of money your employees receive before any taxes and deductions are taken out
Growth History
Growth Investing
A growth investment strategy focuses on capital appreciation. Growth investors look for companies that exhibit signs of above-average growth, through revenues and profits, even if the share price appears expensive. A relatively riskier strategy, growth investing involves investing in smaller companies that have a high potential for growth, blue chips, and emerging markets. This is a research-heavy approach to investing that is best handled by seasoned investors.
GTC
A Good-Til-Cancelled (GTC) order is an order to buy or sell a stock that lasts until the order is completed or cancelled. Brokerage firms typically limit the length of time an investor can leave a GTC order open. This time frame may vary from broker to broker. Investors should contact their brokerage firms to determine what time limit would apply to GTC orders.
Heir
High – Yield Savings Account
A high-yield savings account is an account that pays the account holder a higher-than-average interest rate. If the average savings account in the U.S. offers an interest rate of 1%, for example, then a high-yield savings account might offer a 2% to 5% or higher interest rate.
You can deposit money into a high-yield savings account any time you wish to make your account balance grow. You may also make withdrawals from the account, though you may be limited as to how many times you can take your money out in a given month.
Hybrid Stocks
Impulse Spending
An impulse purchase or impulse buying is an unplanned decision to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.
In the Money
In the money refers to an option contract that, if it were exercised today, would be worth more than $0. A call option is said to be in the money when its exercise price is below the current price of the underlying asset
Income Investing
Inheritance Tax
Initial Deposit
Instant Settlement
Interest Payments
A payment amount determined by the interest rate on an account. As a borrower, an interest payment represents the rate charged for being lent funds. As an investor, interest payments represent income on earned on cash accounts or fixed and variable rate securities.
Interest Rate
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed. The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.
Investment Objectives
IPO
Large – Cap Stocks
Large Market Capitalization
A market cap is the means by which we quantify the size and value of a company. Blue-chip stocks tend to be large-cap stock, which translates into a market valuation that exceeds $10 billion.
Liabilities
Liabilities are amounts of money that a company owes to others. This can include all kinds of obligations, like money borrowed from a bank to launch a new product, rent for use of a building, money owed to suppliers for materials, payroll a company owes to its employees, environmental cleanup costs, or taxes owed to the government. Liabilities also include obligations to provide goods or services to customers in the future.
Limit Order
Lock Up Period
Long Term Investing Strategy
A long-term investing strategy means investing in companies prepared to endure the bad times and that have a plan for the good times. Pricing power, an influential brand presence, and other competitive advantages can mean a lot more than a high speculative valuation.
Margin
Margin Call
Margin Maintenance
Market Capitalization
Market capitalization is the value of a corporation determined by multiplying the current market price of one share of the corporation by the number of total outstanding shares.
Market Hours
Regular trading hours for stocks traded on exchanges and certain other markets are from 9:30 a.m. to 4:00 p.m. Eastern Time.
Market Orders
Maturity
Merger
Mid-Cap Stocks
Mid-cap companies tend to have a market value somewhere between $2 billion and $10 billion and operate within sectors that show the promise to experience quick growth. Not surprisingly, successful companies in these sectors are likely to be growing, as well. Mid-cap stocks carry more risk than large-cap counterparts because they are not as established or secure yet. At the same time, that is what makes them an attractive opportunity for some investors. Examples of mid-cap stocks include 3D Systems Corp (a maker of 3D printers) and the home appliance company Whirlpool.
Minimum Balance
To entice you to keep your high yield savings account as full of cash as possible, banks and credit unions will waive account maintenance fees and offer their most competitive APY as long as your balance stays above the account minimum balance requirement.
If your account balance dips below that amount in a given month, you may be required to pay a maintenance fee on your account and earn a lower APY on your money until your balance rises above the minimum balance. So before you choose a savings account, be sure the minimum balance on it is something you can maintain.
Money Managers
Money Market Funds
Money market funds invest in short-term bonds issued by governments or corporations. Bonds are small loans that allow investors to make a profit off interest payments. Money market funds are low risk because the can only make high-quality investments.
Municipal Bonds
Mutual Funds Benefits
Mutual Funds Drawbacks
Mutual Funds for Beginners
Mutual Funds: How do they work?
When the value of your mutual fund goes up, you make money. The money you make can then be reinvested into the mutual fund so that you have even more shares. When those shares make more money, you can reinvest again so that you get a greater share of the profit. This process can continue up to the point when you decide to sell your shares.
Online Brokerage Firm
Online Brokerage Firm with Assistance
For a little more money per transaction, you can work with a discount broker with assistance. These platforms provide an additional layer of support relative to spartan online brokers and may provide more information about the stocks you are trading or published newsletters with tips.
Option
OTC Market
The Financial Industry Regulatory Authority (FINRA) regulates broker-dealers that operate in the over-the-counter (OTC) market. Many equity securities, corporate bonds, government securities, and certain derivative products are traded in the OTC market. The OTC Bulletin Board (which is a facility of FINRA), and OTC Link LLC (which is owned by OTC Markets Group, Inc., formerly known as Pink OTC Markets Inc.), for example, operate within the OTC market, particularly with respect to OTC equity securities.
Out of Money
Real vs. Personal Property
Realized Yield
Reverse Stock Split
Risk Tolerance
Safe Harbor Statement
SEC
Secured Bond
A secured bond is backed by a particular type of collateral. In the event of a default, that asset is divided between bondholders.
SEP IRA
Shareholders Equity
Short Selling
Small-Cap Stocks
Small-cap companies have a market value ranging from $300 million and $2 billion. A small-cap company may be at the start of its lifespan, serve a niche sector, or exist within a developing arena. Small-cap companies are said to be riskier investments because of their age, size, and the industries they serve. They are also more sensitive to market volatility given their limited resources. However, if you find the right company you could be rewarded handsomely for investing early.
Speculative Stocks
Speculative stocks belong to fledgling companies with unknown futures. A startup is an example of a speculative stock. They are considered higher risk investments.
Stock
A stock, also known as an equity, is when you get a share of ownership in a company. Stocks are sold at the price of each share, the cost of which varies from company to company.
Stock Dividend Split
Stock Funds
Stock Slice
Stock Split
Stop Limit Order
A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, a stop-limit order becomes a limit order that will be executed at a specified price (or better). The benefit of a stop-limit order is that the investor can control the price at which the order can be executed.
Stop Order
A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order. A buy stop order is entered at a stop price above the current market price. Investors generally use a buy stop order to limit a loss or to protect a profit on a stock that they have sold short. A sell stop order is entered at a stop price below the current market price. Investors generally use a sell stop order to limit a loss or to protect a profit on a stock that they own.
Yield
YTC
YTD Change
Year to date (YTD) refers to the period beginning the first day of the current calendar year up to the current date. YTD percent change refers to the comparison of the current YTD to the same time period a year ago.
YTM
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