401(k)
An employer-sponsored retirement plan with tax advantages and often a match.
AGI (Adjusted Gross Income)
Your total income minus specific adjustments, used to determine taxable income.
Amortization
Paying off a loan through fixed payments split between interest and principal.
APR (Annual Percentage Rate)
The yearly cost of borrowing, including fees and points, expressed as a percentage.
APY (Annual Percentage Yield)
The yearly return on savings including compounding, expressed as a percentage.
Capital Gains
The profit from selling an investment for more than you paid.
Compound Interest
Interest earned on both your principal and previously earned interest.
Cost Basis
What you originally paid for an investment, used to figure your taxable gain.
Debt-to-Income Ratio (DTI)
Your monthly debt payments as a percentage of gross monthly income.
Dividend Yield
A stock's annual dividend as a percentage of its share price.
Dollar-Cost Averaging
Investing a fixed amount at regular intervals regardless of price.
DRIP (Dividend Reinvestment Plan)
Automatically using dividends to buy more shares instead of taking cash.
Employer Match
Money your employer adds to your 401(k) based on what you contribute.
Escrow
An account your lender uses to hold and pay your property taxes and insurance.
FICA (Federal Insurance Contributions Act)
The payroll tax that funds Social Security and Medicare.
FIRE (Financial Independence, Retire Early)
Building enough invested assets that their returns cover your living expenses.
Marginal Tax Rate
The tax rate applied to your last dollar of income.
Net Worth
Everything you own minus everything you owe.
PMI (Private Mortgage Insurance)
Insurance that protects the lender when your down payment is under 20%.
RMD (Required Minimum Distribution)
The minimum amount you must withdraw from retirement accounts each year after 73.
Roth IRA
A retirement account funded with after-tax money that grows and withdraws tax-free.
Safe Withdrawal Rate
The percentage of a portfolio you can withdraw yearly with low risk of running out.
Standard Deduction
A flat amount that reduces your taxable income without itemizing.
Traditional IRA
A retirement account funded with pre-tax money that's taxed on withdrawal.