financial terms glossary

The Ultimate Glossary Of Over 200 Finance Terms

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. Negative Amortization — Occurs when a repayment that is made is less than the interest charged on a loan, causing the outstanding balance of the loan to increase. Mortgage — An agreement to borrow money from a bank or similar organization to buy a home. Fixed Rate — An interest rate that stays the same for the life of a loan, or for a portion of the loan term, depending on the loan agreement. Co-Signer — A person, other than the principal borrower, who also signs for a loan. In the event the principal borrower defaults, the co-signer(s) assumes liability to repay the loan.

Nominal YieldThe annual income from a bond expressed as a percentage of its face value, not adjusted for inflation. Market OrderAn order to buy or sell a security immediately at the best available current price. LiabilityA financial obligation or debt owed by an individual or organisation to another party.

Value fund

Collection records can remain on your credit report for 7 years from the last 180 day late payment on the original debt. Some investment funds and companies offer more than one type or group of shares, each of which is considered a class. Each class has different fees and expenses, but all of the classes invest in the same pool of securities and share the same investment objectives.

The net dollar value of a single investment fund share or unit that is calculated by the fund on a daily basis. The possibility that the value of an investment will fall because of a general decline in the financial markets. The risk that you will live longer than expected and run out of retirement money. Charges applied to participants who take advantage of special plan features, such as participant loans. Any debt obligations issued by a government or its agencies, such as U.S.

• Financial products differ in terms of their underlying asset class, volatility, risk and return.
• Retirement PlanningThe process of determining income goals and investment strategies to ensure financial security after stopping work.
• An instruction for a securities transaction from a counterparty against your account for which your matching instruction is missing in the settlement system.
• It refers to modern types of business funding that don’t come from traditional or mainstream lenders (such as a high street bank).

The annual rate of gain or loss on an investment, expressed as a percentage. Investment advisory services also offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera Advisor Networks financial terms glossary LLC is under separate ownership from any other named entity.

• Can also mean the degree to which an asset or security can be quickly bought or sold in the market without adversely affecting the asset’s price.
• So, here’s to making finance both informative and fun, one term at a time.
• An unmanaged, modified, market capitalization-weighted index that measures the performance of the technology sector of the U.S. equity market.

Longevity risk

Zombie FundA closed investment or insurance fund with no new contributions, typically underperforming and costly to exit. Year-End StatementAn annual summary of account activity, performance, and income for investors or account holders. X-Dividend DateThe cut-off date to qualify for a dividend payment; investors purchasing shares after this date are not entitled to the dividend. Venture CapitalInvestment in early-stage businesses with high growth potential, often involving equity stakes and strategic support. Value InvestingA strategy of selecting undervalued stocks with strong fundamentals and holding them for long-term appreciation. Universal Life InsuranceA flexible life insurance policy combining death benefit protection with a cash value component that earns interest.

Asset Valuation

Early payment, pre-payment, or cash discounts that are listed in the invoice’s “Terms of Sale.”.2. A trade discount offered by the client to all, or select, customers especially for volume-based reasons. Learn how to choose a wealth manager who aligns with your goals, offers transparent fees, and helps grow and protect your financial future. Whether you’re exploring financial terms in business, reviewing your portfolio, or preparing for a conversation with your adviser, this glossary will serve as a practical reference point.

Guaranteed lifetime withdrawal benefit

Net WorthThe difference between an individual’s total assets and total liabilities, representing overall financial health. Negative EquityWhen the outstanding mortgage on a property exceeds its current market value, often arising from property value declines. Monetary PolicyThe process by which a central bank controls the money supply and interest rates to achieve economic objectives. Margin CallA demand by a broker for an investor to deposit additional funds or securities to cover potential losses. Market CapitalisationThe total market value of a company’s outstanding shares, calculated by multiplying share price by the number of shares.

Debtor

Economic Cycle The recurring pattern of economic expansion and contraction, influencing investment decisions and market performance. Exchange Rate The price at which one currency can be exchanged for another, significantly impacting international investments and spending. Estate Planning The process of organising your assets and affairs to manage inheritance, reduce taxes, and ensure smooth succession. Find out more about inheritance in our guide on UAE inheritance law for expats. Donor-Advised Fund (DAF) A philanthropic vehicle allowing individuals to donate assets for charitable purposes while retaining advisory privileges over distribution. Defined Benefit Pension A retirement scheme promising a fixed, pre-agreed income, usually based on salary and length of service.

Shareholder-type fees

The higher the duration, the greater the change (higher risk) in relation to interest-rate movements. Class I shares are often referred to as institutional shares because they’re generally intended for financial institutions that purchase shares for their own clients’ accounts. These shares have no front-end sales charge and cannot be purchased by the general public. A rating or grade that’s intended to indicate the credit quality of a bond. The financial strength of its issuer and the likelihood that it will repay the debt are considered.

When this occurs, your debt balance continues to increase despite your payments. A loan that exceeds the limits set by Fannie Mae and Freddie Mac (usually when the loan amount is more than $200, ,000). Also known as a non-conventional or non-conforming loan, these mortgages usually have higher interest rates than standard loans.