529 College Savings Plans These plans let you put aside a certain amount of money each year in a special account where it grows tax-deferred. The plans are offered by individual states and have certain income requirements. If the distributions are used to pay for qualified education expenses that are tax-free.

10-K A 10-K reports are detailed annual reports filed with the SEC. They are like annual reports, but contain much more detailed financial and narrative information. The 10-K is due at the end of the fiscal year.

10-Q These reports are detailed quarterly financial statements that must be filed with the SEC within 35 days of the close of the first three quarters of the company’s fiscal year. The reports must include any relevant information about the state of the company’s financial affairs.

actively managed mutual fund An actively managed mutual fund is one that the manager may use aggressive stock picking strategies attempting earn the highest return possible. This may mean a significant number of trades during the year.

annual report Annual reports are submitted to shareholders at the close of each fiscal year. The year’s financial performance is reported along with significant details about the year’s activities. The first part of the report is usually given to dramatic photographs, stunning graphics, and inspiring messages from the president. The back-end of the report contains the important information on finances, operations, and the auditors report.

best of class Best of class is a way of building a screened portfolio that compares companies to others in their industry rather than against some absolute standard. This means some companies come out as best of class even if the company would be excluded from most other screens. This result is the target of a major criticism of SRI investing.

blue chip stocks Blue chip stocks are considered the highest quality and safest stocks. They are usually large, older companies that have survived many market cycles in tact. The 30 stocks that comprise the Dow Jones Industrial Average (the Dow) would be considered blue chip stocks. Some believe the term comes from the game of poker where the blue chips are always the most expensive.

carbon dioxide Carbon dioxide is a colorless, odorless gas produce from the combustion of fossil fuels. It occurs naturally in our atmosphere and acts as a blanket, among other things, to regulate the Earth’s temperature. Global warming says we are producing so much carbon dioxide (CO2) that the percentage is changing and more heat than normal is being retained.

corporate social responsibility Corporate social responsibility (CSR) is the idea that companies have a responsibility that extends beyond earning a profit for the owners. Some companies take this very seriously and implement a set of policies that have positive impacts on communities, the environment, its workers and other stakeholders. Not all corporate managers agree with this idea.

defined contribution plan A defined contribution plan is a retirement plan where the contributions to the plan are known, but the ultimate benefits paid at retirement are not. Benefits paid at retirement will depend on the performance of investments made in the defined contribution plan, such as 401(k) retirement plans.

dollar cost averaging Dollar cost averaging is investing a fixed amount on a regular basis in a mutual fund, usually monthly and through an automatic debit to your bank account. This investment method means you buy fewer shares when prices are high and more shares when prices are lower resulting in an overall lower average cost.

eco-efficiency Eco-efficiency is the practice of examining the life cycle of products and determining where energy can be saved and environmentally friendly steps taken in the process.

European Common Market The European Common Market is made up of 27 member states in Europe who share a common trade and agricultural policy. A number of common political and financial policies facilitate interaction among the member states. A common currency, the euro, has been adopted by 13 of the members.

exchange traded funds Exchange traded funds (ETFs) are very much like index mutual funds in that they are a basket of stocks that mimics an index of a market or market sector. ETFs, unlike mutual funds, are bought and sold on stock exchanges, so you’ll need to go through a stockbroker. They trade any time the market is open, just like stocks.

exclusionary screen An exclusionary screen sets a social or environmental threshold that a company must meet. If the company fails to meet the test, it is excluded as a possible investment candidate.

financial planner A financial planner will review your current financial status, discuss your goals and devise a plan to help you reach those goals. The planner may also suggest corrective steps such as additional life insurance or the necessity of a will to solve immediate needs. You do not need a license to be a financial planner, although several professional designations require extensive course work. Certified Financial Planner is the most respected of the designations.

float Float is the number of shares of common stock actually being traded in the market.

greenhouse gases Greenhouse gases are released when fossil fuels (oil, natural gas, coals, gasoline, diesel, and so on) are burned. These gases are thought to be changing the composition of our atmosphere making it denser so it retains more heat. This heating, known a global warming, is a major ecological challenge for the future and companies should have a plan in place to deal with it.

growth investor Growth investing is a strategy that attempts to identify companies with significant growth potential. A growth investor is looking for 20 plus percent growth annually as a minimum. Growth investors make money by knowing when to sell a growth stock before it reaches the limits of its growth. Growth stocks that fail to keep growing often fall sharply in price.

institutional investors Pension funds, insurance companies, trust funds and other large pools of money are called institutional investors. These investors tend to be very conservative. As a group, they own the majority of outstanding shares of stock and can move the price of an individual stock or the whole market up or down depending on whether they are buying or selling.

investment advisor Investment advisors are financial professionals who make, buy, and sell recommendations for a fee or percentage of assets they manage.

large cap stock A large cap stock is a company with a market capitalization in excess of $10 billion. A large cap mutual fund would only invest in stocks this size or larger.

living wage Living wage is defined several ways, but it is often thought of as what a family of four needs to earn to reach 100 percent or 150 percent of the federal poverty level. It is then adjusted for the geographic area’s cost of living.

market capitalization Market capitalization is a way of describing the size of a company in terms that make it easy to compare two companies. The market capitalization is calculated by multiplying the number of outstanding shares of common stock by the current stock price. In other words, what would it take to buy the whole company.

microloan This type loan is a very small loan granted to small businesses for expansion or working capital. In the United States, these loans follow fairly traditional application procedures, but may have looser credit requirement. Overseas, microloans are often less than $100 and most often go to women so they can help feed their family through a business.

mid-cap stock A mid-cap stock would have a market capitalization of $2-$9 billion dollars.

money manager A money manager is a financial professional you turn your money over to along with the authority to invest it as they see fit. Money managers have discretionary authority over your money, meaning they can buy or sell when they feel the need to do so. Money managers can also be stockbrokers, although they typically charge a percentage of assets under management as their fee.

mutual fund A mutual fund is a pool of investors’ money managed by professionals with stated investment goals and objectives. Investors leave the buying and selling decisions to professional managers. Investors own shares of the mutual fund and may cash them in at virtually anytime. The fund managers are responsible for making buy and sell decisions and sticking to the fund’s strategy.

mutual fund families Mutual fund families are groups of funds managed by one investment company. The funds are called a family because they share common management and investors can often move their money from one fund to another within the fund without penalty.

National Association of Securities Dealers The National Association of Securities Dealers is a self-regulatory organization of securities dealers that licenses stockbrokers and others involved in the registered securities business. It administers tests that professional must past to be licensed and disciplines members for infractions of securities regulations. The Securities and Exchange Commission oversees its work.

outstanding shares Outstanding shares of common stock refer to the shares owned by the public, including individuals, mutual funds, and institutional investors. A company may retain un-issued shares of its stock, but these are not considered outstanding.

portfolio creep Portfolio creep is when a mutual fund manager begins investing outside the fund’s objectives in order to boost performance. Typically, the stated fund strategy is out of favor or there is another sector or style that is currently hot in the stock market and the fund manager pulls in the hot stocks of the day to help him hit his performance marks.

prospectus A prospectus is a legal document that must accompany any application or sales material for a mutual fund. It spells out the terms and conditions of the fund, the risks, the fees, and identifies the principal money managers.

sector A sector of the economy is a grouping of businesses that have more in common than are different. Economic or industry sectors describe sections of our economy that function and are influenced by many of the same factors. Some examples of sectors include technology, retail, health care, or oil and gas. Stocks are also grouped into sectors.

separate account A separate account is a general term that refers to a high net worth individual or an institutional client. The financial professional manages the account much as a fund manager at a mutual fund works those assets. Typically, a money manager oversees the allocation and investment of assets. For large institutional accounts, this will involve a team of managers.

small cap stock A small cap stock has a market capitalization of $1 billion or less.

social justice Social justice is the concept that everyone in society deserves fair treatment. It goes beyond what the law prescribes and asks what is right and just. Different groups, however, may define “justice” differently.

stockbroker A stockbroker is licensed after passing a series of exams and works for a broker/dealer. Stockbrokers buy and sell registered securities such as stocks, bonds, and mutual funds. They are usually paid a commission—either a flat fee or a fee per share traded. Stockbrokers are the only financial professionals that can trade securities. Other financial professionals can also be stockbrokers and collect commissions and fees on the sale of securities.

stock option Stock options are contracts giving the holder the right, but not the obligation, to buy a certain number of shares of stock at a fixed price before the expiration date. Stock options are used as incentives to encourage directors and management to grow the company and raise the stock price. The option holders exercise their options, buy the shares at a lower price than the current market price, and then sell the shares for a profit if they wish.

sustainability Sustainability is the concept that companies respect the environment through all stages of product development, manufacturing, and disposal so future generations will have access to the resources they’ll need. Many companies file sustainability reports detailing their efforts, such as controlling green house gases.

sweatshop Sweatshop is a derogatory term for a place where workers are treated badly and paid poorly.

value investor Value investing is a strategy that seeks stocks that the market has priced less than the companies’ true value. The value investor counts on the market recognizing the company’s true worth at some point and biding the stock’s price up. Some of the most successful investors have been value investors.