Every finance word, in plain English.

A workplace retirement account funded with pre-tax (or Roth) contributions, often with employer matching. Limits are set by the IRS each year.

An education savings account with tax-free growth and tax-free withdrawals when used for qualified education expenses.

An SEC designation for investors with sufficient income or net worth. Required to access many private investments.

An insurance contract that pays a stream of income, often for life. Some are simple; many are complex products with high fees and surrender charges.

How you split your money across asset classes — typically stocks, bonds, and cash. Drives most of your portfolio's behavior.

Assets Under Management. The total dollars a fund or advisor manages.

How much a stock moves relative to the broad market. Beta of 1 = moves with the market. Beta of 1.5 = swings about 1.5× as much.

The bid is the highest price someone will pay; the ask is the lowest price someone will sell for. The difference between them is the spread.

A loan you make to a government or company in exchange for regular interest payments and the return of the original amount on a future date.

A regular taxable investment account at a firm like Fidelity, Schwab, or Vanguard. No contribution limits; no special tax treatment.

The right to buy something at a specified price by a specified date.

The profit when you sell an investment for more than you paid for it. Held over a year = long-term gain (lower tax rate). Held a year or less = short-term (higher tax rate).

The profit when you sell an investment for more than you paid for it. If you held the investment for more than one year, it's a long-term capital gain — taxed at lower rates (currently 0%, 15%, or 20% federal depending on your income).

The amount you lose when you sell an investment for less than you paid. Can offset capital gains and reduce your tax bill.

The amount you lose when you sell an investment for less than you paid for it. The IRS lets you use capital losses to offset capital gains, and up to $3,000 of losses can be deducted against ordinary income each year. Excess losses carry forward to future years.

A time deposit at a bank with a fixed interest rate and a fixed term. Withdrawing early usually triggers a penalty.

A raw material or basic good — gold, oil, wheat, copper. Often traded via ETFs or futures contracts.

A drop of 10% or more from a recent high — less severe than a bear market.

The original amount you paid for an investment, used to calculate gains or losses when you sell.

A digital asset whose ownership is tracked on a blockchain — a public, distributed database.

A sustained decrease in the average prices of goods and services. The opposite of inflation. Rare in modern economies — generally considered a sign of severe economic distress when it does happen.

Investing a fixed amount on a regular schedule regardless of price. Removes the need to time the market.

An index of 30 large, established U.S. companies. Older and less representative than the S&P 500, but widely quoted in headlines.

The peak-to-trough decline of an investment. A 50% drawdown means the investment fell 50% from its high before recovering.

The peak-to-trough decline of an investment, expressed as a percentage. A 50% drawdown means an investment fell 50% from its all-time high before recovering. Even diversified portfolios experience drawdowns; the question is how big and how long.

Earnings per share. A company's net income divided by total shares outstanding.

Exchange-Traded Fund. A bundle of many investments that trades on a stock exchange like a single stock. Often used to own broad slices of the market cheaply.

The annual fee a fund charges, expressed as a percent of assets. A 0.05% expense ratio costs $5 per year for every $10,000 invested.

U.S. government insurance covering up to $250,000 per depositor, per bank, per ownership category. Protects your money if the bank fails.

The interest rate banks charge each other for overnight loans. The Fed targets this rate; it ripples through the entire economy.

The U.S. central bank. Sets short-term interest rates and tries to balance employment and price stability.

A legal standard requiring an advisor to act in the client's best interest. Not all financial advisors are fiduciaries — always ask.

Financial Industry Regulatory Authority. A self-regulatory body overseeing U.S. brokerage firms and registered representatives.

A stock priced for high expected future growth. Often pays no dividend; profits are reinvested.

An actively managed pool of money using complex strategies — often shorting, leverage, derivatives. Open mostly to institutional and accredited investors.

A savings account that pays a meaningfully higher interest rate than a typical brick-and-mortar bank account.

Health Savings Account. Available with high-deductible health plans. Triple-tax-advantaged: deductible going in, growing tax-free, and tax-free for medical expenses.

A U.S. savings bond with an interest rate that adjusts with inflation. Bought directly from TreasuryDirect.gov; annual purchase limits apply.

A fund that tries to match the performance of a market index, like the S&P 500. No human picks the holdings, which keeps fees very low.

Initial Public Offering. The first time a company sells its shares to the public on a stock exchange.

Individual Retirement Account. A retirement account you open yourself, separate from any employer. Both Traditional and Roth versions exist.

Categories by market cap. Roughly: $10B+ is large, $2B–$10B is mid, under $2B is small. Boundaries vary.

How quickly you can convert an investment to cash without significantly affecting its price. Stocks are liquid; private real estate is not.

Borrowing money from your broker to buy investments. Amplifies gains and losses; can result in losing more than you invested.

Market capitalization. A company's stock price multiplied by total shares outstanding. The market's estimate of the company's total equity value.

A type of savings account that often pays a competitive yield. Offered by banks and credit unions; FDIC-insured.

An investment fund holding very short-term, very safe debt. Different from a money market account — not FDIC-insured but generally considered very stable.

Like an ETF, a bundle of investments — but priced once a day at the close of trading instead of all day long. Often more expensive than ETFs.

An index of all companies listed on the Nasdaq exchange. Heavily weighted toward technology companies.

Contracts giving the right (not the obligation) to buy or sell something at a set price by a certain date. Powerful and risky; not appropriate for beginners.

A market order trades at the next available price. A limit order trades only at a specified price or better.

Funds that buy whole companies, typically using debt, then try to improve them and sell them years later.

The right to sell something at a specified price by a specified date.

Periodically adjusting your portfolio back to your target mix by selling overweight categories and buying underweight ones.

Real Estate Investment Trust. A company that owns income-producing real estate; required by law to distribute most of its taxable income to shareholders.

The amount the IRS forces you to withdraw from certain retirement accounts each year starting in your 70s. Roth IRAs don't have this requirement during the original owner's lifetime.

How much portfolio decline you can stomach without selling. Educational segmentation only — not a recommendation to take a specific level of risk.

An online service that automatically builds and manages a diversified portfolio for you, usually using ETFs, for a low fee.

An account or contribution type where you pay tax now in exchange for tax-free withdrawals in retirement, including all the gains.

An index of about 500 of the largest publicly traded companies in the U.S. Frequently used as the benchmark for U.S. stock market performance.

The U.S. Securities and Exchange Commission. The federal regulator overseeing public markets, brokerages, and investment advisers.

The risk of bad market returns early in retirement. Even with the same average return, early losses combined with withdrawals can permanently shrink a portfolio.

Borrowing a stock and selling it, hoping to buy it back later at a lower price. Losses are theoretically unlimited.

A cryptocurrency designed to track the value of an external asset, usually the U.S. dollar.

A small share of ownership in a company. Owning one share of a company with one billion shares means you own one billionth of it.

A weaker standard than fiduciary. Requires only that an investment be 'suitable' for the client, not necessarily the best option for them.

Short-term U.S. government debt sold at a discount and maturing in one year or less. Considered the safest dollar investment in the world; exempt from state and local income tax.

A fund that automatically adjusts its mix as a target year approaches, becoming more conservative as you near retirement.

Treasury Inflation-Protected Securities. Government bonds whose principal adjusts with inflation, helping protect purchasing power.

An account where contributions may be tax-deductible today, growth is tax-deferred, and withdrawals in retirement are taxed as ordinary income.

A long-term U.S. government bond, typically 20 or 30 years to maturity.

A medium-term U.S. government bond, typically 2 to 10 years to maturity.

A stock trading at a low price relative to current earnings, book value, or other fundamentals. Often pays dividends.

Funds that invest in early-stage startups, expecting most to fail and a few to become very valuable.

The schedule on which employer contributions to your 401(k) become fully yours. Leaving early can mean forfeiting unvested matches.

Selling an investment at a loss and buying it back within 30 days. The IRS disallows the tax deduction on the loss when this happens.

The annual income from an investment, expressed as a percent of its price. A $100 stock paying $3 in dividends has a 3% dividend yield.