Glossary
Plain definitions of the financial terms used in Teloria's lessons, each checked against official US sources.
49 terms
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A
B
Blockchain
A blockchain is a record of transactions kept on many computers at once, where transactions are grouped into batches called blocks and added in order.
Bond
A bond is a loan to a government or a company: you lend the money, the borrower pays you interest for a set period, then repays the amount borrowed.
Bond fund
A fund that holds many bonds at once, with a share price that moves with the value of the bonds it holds and usually no maturity date of its own.
Brokerage account
An investment account at a registered firm that sends your buy and sell orders to the market to be carried out and holds the cash and securities you own.
C
Capital gain
A capital gain is the profit from selling property you hold as an investment, such as shares of stock, for more than it cost you; selling for less gives a capital loss.
Certificate of deposit
A certificate of deposit, or CD, is a bank or credit union deposit that pays a fixed interest rate for a fixed term, with a penalty for taking the money out early.
Commission
A commission is a fee you pay a broker or salesperson for carrying out a trade or for selling you an investment, charged per transaction.
Coupon
The interest rate a bond pays each year, stated as a percent of its face value: a 5 percent coupon on a $1,000 bond means $50 of interest a year.
Cryptocurrency
A digital asset whose ownership is tracked on a blockchain, a shared electronic record kept by a network of computers rather than by a bank.
D
Default
Default usually means a borrower, such as a company or government that issued a bond, has failed to make a promised interest or principal payment.
Diversification
Diversification means spreading your money across many different investments so that a bad result from any one of them does limited damage.
Dividend
A dividend is a payment, usually cash, that a company makes to shareholders out of profits, normally a set amount per share, which it can reduce or stop.
E
Early withdrawal penalty
An extra 10 percent federal tax the IRS generally charges on the taxable part of money taken out of a retirement account before age 59 and a half, on top of the regular income tax due.
Employer match
Money an employer pays into your workplace retirement plan based on what you contribute from your own pay, using a formula set out in the plan documents.
ETF
An exchange-traded fund (ETF) is a fund that holds many investments at once and whose shares trade on a stock exchange throughout the day.
Expense ratio
The yearly fee a fund charges to cover its operating costs, quoted as a percentage of the fund's assets, so what you pay tracks the size of your holding.
F
Face value
The fixed amount a bond's issuer promises to repay when the bond matures, also called par value or principal.
FDIC insurance
FDIC insurance is US government coverage that repays your bank deposits, up to $250,000 per depositor, per insured bank, for each account ownership category, if the bank fails.
Federal Reserve
The central bank of the United States, which influences interest rates and credit (its monetary policy), mainly by setting a target range for the rate banks charge each other for overnight loans.
I
Index
An index is a list of investments plus a rule for combining their value into one number that shows how that group is doing.
Inflation
Inflation is a general rise in prices over time, which means each dollar buys less and fixed payments buy less as the years pass.
Interest rate
The price a borrower pays for the use of money, stated as a percentage of the amount borrowed, usually per year.
IRA
A tax-advantaged retirement account you open yourself at a financial institution rather than through an employer, in either a traditional or a Roth version.
IRS
The Internal Revenue Service, the US federal agency that collects taxes and enforces federal tax law, including the rules on retirement accounts and investment income.
Issuer
The issuer is the borrower behind a bond: the government, agency or company that sells it, owes the interest and must repay the face value.
L
M
N
P
Percentage point
The unit used for the plain arithmetic difference between two percentages: a move from 4 percent to 5 percent is a rise of 1 percentage point.
Portfolio
A portfolio is the whole collection of investments held together, whether by one person in their accounts or by a fund on behalf of its investors.
Prospectus
A prospectus is the legal document a fund, or a company registering securities for sale to the public, files with the SEC describing its terms, costs and risks.
R
S
Savings account
A deposit account at a bank or credit union, paying interest at a rate that can change, with deposits insured up to $250,000 per depositor, per insured bank or credit union, per ownership category.
Securities and Exchange Commission
The SEC is the US federal agency that regulates securities markets, writing and enforcing the rules for exchanges, brokers, fund companies and public company disclosure.
Shareholder
A shareholder is someone who holds shares of a company's stock and so owns a part of that company.
Stock
A stock is a unit of ownership in a company, which makes you a part owner of the business and comes with no promise of any payment.
Stock exchange
A regulated marketplace where shares of listed companies and often other securities are bought and sold, and where the resulting prices are published.
T
Taxable income
Taxable income is what is left of your income for the year after deductions, and it is the figure your federal income tax is calculated on.
The S&P 500
A stock market index that measures the value of the shares of 500 large companies listed on US stock exchanges and reports it as a single number.
Time horizon
Your time horizon is how long it is until you need to spend money you have invested.
Total return
Total return is the whole result of an investment over a period: the change in its price plus any cash it paid you, measured against what you put in.
Traditional IRA
A retirement account you open on your own, where your contribution may be tax-deductible now and the money you deduct, plus its growth, is taxed as ordinary income when you withdraw it.
Treasury security
A Treasury security is a loan to the US federal government, such as a Treasury bill, note or bond, repaid on a set date, with interest.
V
Vesting
Vesting is the process of earning full ownership of the money an employer puts into your retirement account, by staying at the job for a period set by the plan.
Volatility
Volatility is how much an investment's price moves up and down over a period: high volatility means large, fast swings, low volatility means smaller ones.