A section in the Internal Revenue Code that provides guidelines for early withdrawals from retirement-based accounts.

A type of qualified, employer-based plan in which employees can set aside a portion of their before-tax earnings for retirement. Account balances grow tax deferred until retirement, at which time distributions are taxed as ordinary income. Some employers offer their employees a match for a percentage of their contributions.

A type of qualified retirement based plan that is established by a nonprofit or a public-education organization. Employees can set aside a portion of their before-tax earnings for retirement. Account balances grow tax deferred until retirement, at which time distributions are taxed as ordinary income.

A type of qualified deferred compensation plan that is established by a state or a local government. Employees can set aside a portion of their before-tax earnings for retirement. Account balances grow tax deferred until retirement, at which time distributions are taxed as ordinary income.

An income tax term commonly used to refer to the taxpayer’s gross income less specified expenses, such as traditional IRA and employer-sponsored retirement plan contributions.

A person licensed by a state (or states) to sell insurance.

The annual rate that is charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of the loan.

The effective annual rate of return, taking into account the effect of compound interest.

The process of dividing investments among different asset classes to optimize the risk/reward trade-off.

Mutual funds that offer a one-stop fund that includes U.S. stocks, international stocks, government bonds, corporate bonds, money-market accounts, and real estate markets.

Different categories of investments that include domestic stocks, international stocks, government bonds, corporate bonds, and real estate.

Mutual funds that maintain a balanced combination of common stocks, bonds, and perhaps preferred stocks. Balanced funds offer both income and growth because they hold both bonds and stocks.

A term that is used to express a negative investment attitude.

A prolonged decline in stock prices that extends over a period of time. A 20 percent decline in value is a generally accepted indication of a bear market.

The person who receives benefits or payments from an estate or an insurance policy.

Corporations with some of the highest quality of all common stocks because they are dominant companies that have the ability to pay steady dividends in both good and bad times.

A debt instrument that is issued by a government, state, city, municipality, or corporation. The seller of the bond agrees to repay the original principal amount of the loan at a specified time and agrees to make scheduled interest payments.

A measurement of quality and safety pertaining to the issuer’s financial condition. In other words, an evaluation from a rating agency that indicates the likelihood of the debt issuer’s ability to meet scheduled interest and principal repayments. Ratings range from AAA (highest quality) to D (lowest quality).

A term that is used to express an optimistic investment attitude.

A prolonged advance in stock prices that extends over a period of time. A 20 percent increase in value is a generally accepted indication of a bull market.

The management of the inflows and outflows of a person’s day-to-day income.

The equity (savings) component within certain life insurance policies.

A short-term deposit through a financial institution that pays a specific interest rate for a specific period of time.

A demand made by the insured, or the insured’s beneficiary, for payment of benefits provided by an insurance policy.

A federal law that allows individuals the ability to properly compare credit terms from all lending institutions in order to make meaningful comparisons.

These funds are bonds or preferred stock that can be exchanged for a fixed number of shares in the common stock of the issuing company. Convertible bond funds combine features of both stocks and bonds.

A corporate bond that can be converted into stock at a predetermined price.

Mutual funds that diversify their holdings in various forms of corporate debt.

A debt instrument that is issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company.

The interest rate stated on a bond when it’s issued. The coupon is typically paid semiannually.

Companies whose earnings tend to fluctuate sharply with their business’s cycles.

Also known as a bond. See bond.

The amount of an insured loss paid by the policyholder. If you have a $500 deductible for auto insurance, you pay the first $500 worth of damages to your car if you are in an accident. As deductibles increase, premiums decrease.

Companies that are considered to be recession resistant. They often sell products, such as items that a person eats, drinks, or smokes in all types of economies.

A type of employer-sponsored retirement plan where compensation has been earned by the employee but has not yet been paid from the employer. With total direction from the employee, the employer holds the income, invests it, and delays the payment for a set period of time that defers the taxation of the income.

A type of employer-sponsored retirement plan where lifetime retirement income is provided for the employee through the use of various formula-based models (salary history and duration of employment). The responsibility of contributions, investment risk, and portfolio management is with the employer.

An insurance policy that provides supplementary income in the event of an illness or accident resulting in a disability that prevents the insured from working.

The spreading of risk by placing assets in various types of investments.

A distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders.

An investment method that involves regular and routine purchases of a security of equal dollar amounts.

A price-weighted American index that measures the share price of 30 industrial-based corporations.

A legal document giving one person the power to act for another person, even if the individual becomes incapacitated.

The total amount of earning divided by the number of shares outstanding.

Mutual funds that seek a portfolio of high-dividend paying stocks, convertible securities, and bonds.

The value of items that an individual owns, such as stocks, bonds, real estate, art collections, collectibles, antiques, jewelry, life insurance, and anything else of value.

A federal tax levied on an heir’s inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. The estate tax does not apply to surviving spouses.

An index fund that trades like a stock.

Specific situations, conditions, or circumstances not covered by an insurance policy.

A debt instrument that pays a fixed rate of income per year until maturity.

A federal tax applied to an individual giving anything of value to another person.

Mutual funds that specialize in corporations throughout the world, including the United States.

A debt instrument that is backed by the full faith and credit of a government. The government agrees to repay the original principal amount of the loan at a specified time and agrees to make scheduled interest payments.

Mutual funds who own securities that are backed by the full faith and credit of a government.

The creator of a trust, meaning the individual whose assets are placed into the trust.

Mutual funds that seek a balanced stock portfolio of growth as well as current income form dividends.

Corporations whose earnings are reinvested in capital projects and therefore normally do not pay a dividend.

A handwritten will.

A type of loan in which the borrower uses the equity in their home as collateral.

Corporations where a substantial portion of earnings are paid out in the form of a dividend.

Mutual funds that replicate the stocks of a broad section of the market.

The rate at which the prices for goods and services are rising, and subsequently resulting in a loss of purchasing power.

The person/organization covered under an insurance policy.

An insurance company. Also known as a carrier.

Debt instruments that are issued by corporations and/or governments outside the United States.

Mutual funds that typically invest primarily in high-quality foreign government or corporate bonds.

Stocks of companies that are outside the United States.

Mutual funds that specialized in companies outside the United States.

The responsibility for causing injury to someone or damage to property.

A publicly traded company that has a market capitalization of $10 billion or more.

A loan issued by an insurance company that uses the cash value of a person’s life insurance policy as collateral.

The ability to convert an asset to cash quickly without affecting the asset’s price. Also known as “marketability.”

A trust developed by a person during his or her lifetime. Typically, it is used to maintain control over assets while alive and to control the disposition of them at death. A living trust avoids the probate process and may provide for the immediate distribution of assets.

A legal document that sets the guidelines for the medical care an individual desires in the event that he or she becomes incapacitated.

Mutual funds that seek capital gains from companies that have potential for steady growth in earnings. Less volatile, and more consistent than maximum capital gains funds, growth funds aim to achieve a rate of growth that beats inflation.

See liquidity.

The market value of a company’s outstanding shares. Multiply the stock price by the total number of outstanding shares.

A publicly traded company that has a market capitalization ranging from $50 million to $300 million.

A publicly traded company that has a market capitalization ranging from $2 billion to $10 billion.

A mutual fund that invests primarily in short-term financial instruments such as Treasury bills and CDs.

An investment that represents pools of mortgages backed by a specific government agency.

A debt security that is issued by a municipality, state, or county to finance its capital expenditures. The interest is exempt from federal taxes and from most state and local taxes if you live in the state in which the bond is issued.

A diversified, professionally managed portfolio of securities that pools the assets of investors and invests in accordance with a stated set of objectives.

A person/organization that purchases an insurance policy.

Mutual funds that primarily invest in stocks of gold-mining firms and other companies engaged in the business of precious metals.

The amount of money paid or payable for coverage under an insurance policy.

A company’s current share price divided by the per-share earnings.

The legal process in which a will is reviewed to determine whether it is valid and authentic.

A type of employer-based retirement plan that provides a tax benefit when employees contribute.

The cost of a unit of insurance; the basis for the premium.

The return on an investment expressed as a percentage after subtracting the effects of taxes and inflation.

The restructuring of debt that incorporates a change to the number of years until maturity and/or the interest rate of the loan.

An annual amount that qualified plan participants must distribute from their pre-tax retirement accounts once they turn 70½ years of age.

The possibility of loss. The chance that an investment’s actual return will be different than expected.

The degree of uncertainty that an investor can handle in regards to the valuation of their investment.

An individual retirement account that is funded with after-tax dollars and grows income-tax free. Unlike traditional IRA accounts, a Roth IRA does not require you to take a minimum distribution at a specific age.

An employer sponsored plan under which plan contributions are made to participating employee’s IRA. Tax-deferred contribution levels are higher than for IRAs but probably lower than SEPs.

A debt backed by collateral to reduce the risk associated with lending.

An employer-sponsored plan under which plan contributions are made to participating employee’s IRA. These contribution amounts are usually higher than the IRA contribution.

Also called emerging growth funds, these are a type of maximum capital gain fund specializing in stocks of promising small companies.

A publicly traded company that has a market capitalization ranging from $300 million to $2 billion.

Mutual funds that limit their investments to companies that are not involved in or produce products that are social or morally controversial.

A company where it’s stock price is subjected to a wider swing in share price compared to a typical stock.

An index of 500 American corporations that are considered to be an overall representation of the U.S. stock market.

An equity ownership position in a corporation that provides the possibility for dividends and growth.

An order that is placed to sell a security when it reaches a certain price.

A savings plan that is registered with the U.S. government and provides deferral of tax obligations until distribution.

A life insurance policy that provides coverage for a fixed period of time. After that period, the insured can either drop the policy or pay annual premium increases to continue coverage.

A trust that is created as a result of explicit instructions from a deceased’s will.

The length of time over which an investment is made or held before it is liquidated.

An individual retirement account that generally is funded with before-tax dollars and grows income tax deferred. Withdrawals are subjected to ordinary income tax and may also be subject to a 10 percent penalty if withdrawn prior to age 59½. Unlike Roth IRA accounts, a traditional IRA requires you to take minimum distributions beginning at the age of 70½.

A short-term debt security issued by the U.S. government that matures between 4 and 26 weeks after issue. Treasury bills are purchased at a discount and mature at their face value.

A long-term debt security issued by the U.S. government that has a maturity of more than 10 years. Interest is paid semiannually and is exempt from state and local income taxes.

A mid-term debt security issued by the U.S. government that matures in 1 to 10 years. Interest is paid semiannually and is exempt from state and local income taxes.

A fiduciary relationship where one party, known as the grantor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.

An individual who holds or manages assets for the benefit of another.

An insurance company employee who reviews applications for insurance to ensure they are acceptable and appropriately priced. Sometimes this term refers to an insurer.

A loan that is issued and supported only by the borrower’s creditworthiness, rather than by some sort of collateral.

A bond that offers a fixed rate of interest over a fixed period of time.

A form of whole life insurance that allows the owner of the policy to allocate a portion of your premium dollars to a separate account comprised of various investment options.

The relative rate at which the price of a security or group of securities moves up and down, often in comparison to the price movement of the S&P 500.

A life insurance policy that remains in force for the insured’s whole life and requires premiums to be paid every year into the policy.

A legal document that takes effect at death and indicates who is to administer an estate and how the estate is to be distributed. Wills may contain testamentary trusts as well as instructions for the care of dependents.