#separator:tab #html:false #tags column:4 Interest The cost of borrowing money, or the reward for lending it tp-finance-investing Principal The original amount borrowed or invested tp-finance-investing Simple interest Interest calculated only on the principal tp-finance-investing Compound interest Interest calculated on principal plus past interest tp-finance-investing APR Annual percentage rate; yearly cost of borrowing tp-finance-investing APY Annual percentage yield; yearly return including compounding tp-finance-investing Rule of 72 Divide 72 by the interest rate to estimate years to double tp-finance-investing Inflation A general rise in prices over time tp-finance-investing Time value of money Money now is worth more than the same amount later tp-finance-investing Present value What a future sum is worth today tp-finance-investing Future value What money today will be worth later at a given rate tp-finance-investing Credit score A number summarizing creditworthiness tp-finance-investing Credit report Record of a person's borrowing history tp-finance-investing Credit limit The maximum amount a lender lets you borrow on a card tp-finance-investing Credit utilization The share of available credit being used tp-finance-investing Mortgage A loan to buy real estate, secured by the property tp-finance-investing Down payment The up-front part of a purchase price paid in cash tp-finance-investing Amortization Paying off a loan through scheduled payments tp-finance-investing Collateral An asset pledged to secure a loan tp-finance-investing Default Failing to repay a loan as agreed tp-finance-investing Net worth Assets minus liabilities tp-finance-investing Asset Something owned with value tp-finance-investing Liability A debt or obligation tp-finance-investing Budget A plan for income and spending tp-finance-investing Emergency fund Savings set aside for unexpected costs tp-finance-investing Checking account Account for everyday spending tp-finance-investing Savings account Account that earns interest on deposits tp-finance-investing Certificate of deposit Bank deposit with a fixed term and rate tp-finance-investing FDIC insurance US program insuring bank deposits up to a limit tp-finance-investing Gross income Income before taxes and deductions tp-finance-investing Net income Income after taxes and deductions tp-finance-investing Tax bracket Income range taxed at a specific rate tp-finance-investing Marginal tax rate The rate paid on the next dollar earned tp-finance-investing Deduction An amount subtracted from taxable income tp-finance-investing Tax credit An amount subtracted directly from taxes owed tp-finance-investing 401(k) US employer retirement plan tp-finance-investing IRA Individual retirement account tp-finance-investing Roth account Retirement account funded with after-tax money tp-finance-investing Pension A retirement income plan from an employer tp-finance-investing Social Security US government program providing retirement and other benefits tp-finance-investing Stock A share of ownership in a company tp-finance-investing Bond A loan to a company or government that pays interest tp-finance-investing Mutual fund A pooled investment holding many securities tp-finance-investing Index fund A fund designed to match a market index tp-finance-investing ETF Exchange-traded fund that trades like a stock tp-finance-investing Portfolio A collection of investments tp-finance-investing Diversification Spreading investments to reduce risk tp-finance-investing Asset allocation Dividing investments among categories like stocks and bonds tp-finance-investing Risk tolerance How much loss an investor can accept tp-finance-investing Volatility How much and how quickly a price moves tp-finance-investing Bull market A period of rising prices tp-finance-investing Bear market A period of falling prices, often 20 percent or more tp-finance-investing Dividend A payment from a company to shareholders tp-finance-investing Dividend yield Annual dividend divided by share price tp-finance-investing Capital gain Profit from selling an asset for more than its cost tp-finance-investing Capital loss A loss from selling an asset for less than its cost tp-finance-investing Market capitalization Share price times number of shares tp-finance-investing P/E ratio Price-to-earnings: share price divided by earnings per share tp-finance-investing Earnings per share Profit divided by number of shares tp-finance-investing Blue chip Shares of large, established, stable companies tp-finance-investing Stock exchange A marketplace where securities are traded tp-finance-investing Stock market index A measure of a group of stocks, like the S&P 500 tp-finance-investing Brokerage A firm that buys and sells securities for clients tp-finance-investing Expense ratio Annual fund fee as a percent of assets tp-finance-investing Liquidity How quickly an asset can be turned into cash tp-finance-investing Yield The income return on an investment tp-finance-investing Maturity The date a bond or loan is due tp-finance-investing Coupon A bond's stated interest payment tp-finance-investing Treasury bill A short-term US government security tp-finance-investing Credit rating An evaluation of a borrower's ability to repay tp-finance-investing Junk bond A higher-risk, lower-rated bond tp-finance-investing Hedge An investment made to reduce risk tp-finance-investing Option A contract giving the right to buy or sell at a set price tp-finance-investing Short selling Selling borrowed shares hoping to buy them back cheaper tp-finance-investing Margin Borrowing from a broker to invest tp-finance-investing Dollar-cost averaging Investing a fixed amount at regular intervals tp-finance-investing Rebalancing Adjusting a portfolio back to target allocations tp-finance-investing Compound annual growth rate Smoothed yearly growth rate over a period tp-finance-investing Bubble Prices far above underlying value that later fall sharply tp-finance-investing Recession A significant decline in economic activity tp-finance-investing Interest rate Percent charged or paid for the use of money tp-finance-investing Central bank The national bank that manages money and interest rates tp-finance-investing Fiduciary Someone legally required to act in a client's best interest tp-finance-investing Annuity A series of regular payments tp-finance-investing Insurance premium Payment made to keep an insurance policy tp-finance-investing Deductible Amount you pay before insurance pays tp-finance-investing Overdraft Spending more than the account holds tp-finance-investing Wire transfer Electronic transfer of money between banks tp-finance-investing Cryptocurrency A digital currency secured by cryptography; prices are highly volatile tp-finance-investing Ponzi scheme Fraud paying early investors with money from later ones tp-finance-investing Identity theft Misuse of someone's personal information to commit fraud tp-finance-investing