If a banker, adviser, tax form, or insurance page uses a term you do not know, look it up here. No shame. No circular definitions. Just what it means, why it matters, and what can bite you.
A line of credit backed by investments in a brokerage account. You borrow cash without selling those investments. It can fund a large cost while investments remain in the account, and it may avoid a sale at that moment.
Read the full glossary entry ↓Search a word, abbreviation, or idea. Try “SBLOC,” “Roth,” “health insurance,” or “fees.”
130 terms explained plainly
A retirement account offered through a job. You can put part of each paycheck into it, and an employer may add money too.
Why it matters: The money can grow without a yearly tax bill. Taxes depend on whether your money goes into a traditional or Roth 401(k).
Read the plain-English article →A work retirement account often offered by schools, hospitals, churches, and nonprofit groups. It works much like a 401(k).
Why it matters: It lets you save from your paycheck and may include money from your employer.
A work retirement account often offered to state and local government workers. Some nonprofit employers offer one too.
Why it matters: It can give you another place to save before taxes or in a Roth account.
Also called: health insurance Marketplace, Obamacare
A government website where people can compare and buy health insurance. ACA stands for Affordable Care Act.
Why it matters: It can be a way to get coverage after leaving work and before Medicare starts.
Read the plain-English article →An investment manager picks what to buy and sell in an effort to beat a market index.
Why it matters: You are paying for human choices instead of simply following an index.
Also called: AGI
A tax number based on your income after certain allowed adjustments. It appears on your federal tax return.
Why it matters: Many tax breaks and other programs use AGI as a starting point.
The way a loan payment is split between interest and the amount you borrowed over time.
Why it matters: Early mortgage payments often contain more interest. Later payments usually pay down more of the loan.
Also called: APR
A yearly measure of borrowing cost. It includes the interest rate and certain fees.
Why it matters: APR can make it easier to compare two loans or credit cards.
A contract with an insurance company. You pay money in, and the company may pay money back now or later.
Why it matters: Some annuities can create a steady check for life. Others are mainly investment products.
Read the plain-English article →Something you own that has value. Cash, a home, a car, stock, and a business can all be assets.
Why it matters: Your assets are one side of your net worth.
How your investment money is split among stocks, bonds, cash, and other types of assets.
Why it matters: This mix has a large effect on how much your account may rise or fall.
Read the plain-English article →Also called: AUM fee, percentage fee
A fee based on the amount of money an adviser manages. A 1% fee costs about $10,000 a year on $1 million.
Why it matters: The dollar fee usually grows when the account grows.
Read the plain-English article →Also called: bp, bps
One hundredth of one percentage point. One basis point is 0.01%, and 100 basis points equal 1%.
Why it matters: Banks and investment firms use basis points when talking about rates and fees.
A period when investment prices fall a lot. People often use the term after a major stock index drops at least 20% from a recent high.
Why it matters: A large drop matters more when you must sell investments for living costs.
A person or group named to receive money or property after someone dies.
Why it matters: Retirement accounts and life insurance often pass to the named beneficiary, even when a will says something else.
Read the plain-English article →An IOU from a government, city, or company. You lend money and the borrower promises to pay interest and return the money later.
Why it matters: Bonds can provide income and may move differently from stocks.
Also called: taxable investment account
An account used to buy and hold investments such as stocks, bonds, mutual funds, and ETFs.
Why it matters: Unlike a retirement account, it usually has no special retirement tax shelter or age rule.
A period when investment prices rise for a while and people feel hopeful about the market.
Why it matters: Rising markets can make a plan look safer than it may be in a bad year.
The profit when you sell an investment or other asset for more than you paid for it.
Why it matters: A gain may create a tax bill. The rate can depend on what you sold and how long you owned it.
Read the plain-English article →The loss when you sell an investment or other asset for less than you paid for it.
Why it matters: Some losses can lower taxable gains or other income within tax rules.
Money coming in and money going out during a set time.
Why it matters: A person can own valuable things and still run short of cash to pay monthly bills.
Read the plain-English article →Extra money some older workers are allowed to put into a retirement account above the normal yearly limit.
Why it matters: It can help people save more in the years close to retirement.
Read the plain-English article →Also called: CD
A bank or credit-union account that pays interest when you agree to leave money there for a set time.
Why it matters: It may pay more than a regular savings account and can be useful for money needed on a known date.
Also called: CFP, CFP professional
A person who has met education, exam, experience, and ethics rules set by the CFP Board.
Why it matters: The letters show training, but they do not tell you the price, service, or fit.
A federal rule that may let you keep a work health plan for a limited time after a job or other qualifying event ends coverage.
Why it matters: It can prevent a health-insurance gap while you move to another plan.
Read the plain-English article →The share of a covered medical bill you pay after meeting the deductible. It is usually shown as a percent.
Why it matters: A plan with 20% coinsurance may still leave you with a large bill for costly care.
Something you promise to a lender as backup for a loan. The lender may take or sell it if the loan is not paid.
Why it matters: A home backs a mortgage. Investments can back an SBLOC or margin loan.
Money someone earns when you buy or sell a product through them.
Why it matters: A commission can give a salesperson a reason to favor one product over another.
Also called: compound interest
Growth earned on your original money and on earlier growth.
Why it matters: Given enough time, growth on past growth can become a large part of an account.
Also called: CPI
A government measure of how prices change for a group of goods and services over time.
Why it matters: It is one common way to talk about inflation.
The backup person or group that gets an account if the first beneficiary cannot.
Why it matters: A backup can prevent an account from falling into a slower or less useful default process.
Also called: copayment
A fixed dollar amount you pay for a covered health service or drug.
Why it matters: Copays add to the monthly premium and other health costs.
The starting tax value of something you own. It is often what you paid, changed by items such as reinvested dividends, improvements, or earlier tax events.
Why it matters: The difference between sale price and basis helps decide the taxable gain or loss.
Read the plain-English article →Also called: COLA
An increase meant to help a payment keep up with rising prices.
Why it matters: Social Security has a yearly COLA formula. Some pensions have one, and many pensions do not.
Read the plain-English article →A number built from information in your credit reports. Lenders use it to judge how likely you are to repay debt.
Why it matters: It can affect whether you get a loan and what rate you pay.
The amount you pay for covered care or a covered loss before an insurance plan starts paying its share.
Why it matters: A low monthly premium can come with a high deductible.
Also called: pension plan
A retirement plan that promises a payment based on a formula, often using pay and years of work.
Why it matters: This is the kind of plan most people mean when they say pension.
A retirement plan where money goes into your own account. What you have later depends on money added, fees, and investment results.
Why it matters: 401(k), 403(b), and many 457(b) plans fit this group.
Spreading money among many investments instead of betting heavily on one.
Why it matters: One failure may hurt less when you own many different things.
Read the plain-English article →Money a company or fund pays to owners, usually from income or profits.
Why it matters: Dividends can be part of investment return and retirement cash flow.
Putting the same dollar amount into an investment on a regular schedule.
Why it matters: You buy more shares when the price is low and fewer when it is high.
A drop from an investment's high point to a later low point. It can also mean taking money out of savings over time.
Why it matters: Context matters because the same word can describe a market loss or retirement withdrawals.
Money from working, including wages, tips, and net income from self-employment.
Why it matters: Some retirement contributions and tax rules require earned income.
Cash set aside for a surprise bill or loss of income.
Why it matters: It can keep a bad month from turning into credit-card debt or a forced investment sale.
Ownership value. Home equity is home value minus debt. A stock is equity in a company.
Why it matters: The word changes slightly based on whether people are discussing a home, business, or investment.
The money, property, rights, and debts a person leaves at death.
Why it matters: An estate may include a home, accounts, personal items, a business, and bills.
The papers and choices that say who handles your money and care, and what happens to property at death.
Why it matters: A plan can include a will, trust, powers of attorney, health papers, and beneficiary forms.
Also called: ETF
A basket of investments that trades on an exchange during the day, much like a stock.
Why it matters: One ETF can hold hundreds or thousands of stocks or bonds.
Read the plain-English article →The yearly operating cost of a fund, shown as a percent of the money in the fund.
Why it matters: A 0.50% expense ratio costs about $500 a year for each $100,000 invested.
Read the plain-English article →Federal protection for covered deposits at an insured bank when that bank fails.
Why it matters: It protects certain checking, savings, money-market deposit, and CD accounts within rules and limits.
An adviser or firm that may receive both client fees and sales pay such as commissions.
Why it matters: The name sounds like fee-only, but it is not the same.
An adviser paid by clients rather than by product commissions.
Why it matters: Pay may be hourly, flat, yearly, or based on account size.
A person or firm required to put a client's interest ahead of its own in the work covered by that duty.
Why it matters: The word describes a legal duty, not a promise that every service is useful or every fee is fair.
Read the plain-English article →Investments built around lending money, such as many bonds and bond funds.
Why it matters: They may provide interest and can play a different role from stocks.
An interest rate that stays the same for the time stated in the agreement.
Why it matters: The payment is easier to plan than one tied to changing rates.
Also called: client relationship summary
A short form that explains an investment firm's services, fees, conflicts, and legal history in a standard format.
Why it matters: It can help you compare firms and prepare questions.
Also called: FRA
The Social Security age used to decide your full retirement benefit under current rules.
Why it matters: Starting before this age usually lowers the monthly check. Waiting later can raise it up to age 70.
Read the plain-English article →Income before taxes and other amounts are taken out.
Why it matters: A gross paycheck or gross rent is not the amount you can spend.
A payment promised under stated rules, such as Social Security, a pension, or some annuity payments.
Why it matters: Steady income can lower the amount that investments must provide.
Also called: HSA
A special account for eligible medical costs when you have a qualifying health plan.
Why it matters: It can offer a tax break when money goes in, while it grows, and when it pays eligible medical bills.
Read the plain-English article →The part of a home's value you own after subtracting loans tied to it.
Why it matters: It may be a large part of net worth.
Also called: HELOC
A line of credit backed by your home. You can borrow, repay, and borrow again during the allowed period.
Why it matters: It can fund repairs or other large costs without selling the home.
Also called: IRMAA, Medicare income surcharge
An extra amount some people with higher income pay for Medicare Part B and Part D.
Why it matters: A large Roth conversion or other income can raise a future Medicare bill.
A fund that tries to follow a market list, such as the S&P 500, instead of having a manager pick winners.
Why it matters: Index funds often have low fees and broad holdings.
Read the plain-English article →Also called: IRA
A personal retirement account opened through a bank, broker, fund company, or other financial firm.
Why it matters: It can hold investments and give tax benefits under traditional or Roth rules.
Check the official source: IRS retirement plan definitions ↗A broad rise in prices over time. Each dollar then buys less than before.
Why it matters: A retirement that lasts decades must plan for higher future costs.
The price paid for using money. A borrower pays it, and a saver or lender may earn it.
Why it matters: The rate, time, and compounding decide much of the total cost or growth.
The chance that an investment does not do what you need. You may lose money, lose buying power, or be unable to sell when needed.
Why it matters: Risk is more than price movement. Time, taxes, fees, and cash needs matter too.
A pension choice that keeps paying some amount to a surviving spouse or other named person after the first person dies.
Why it matters: It can protect the survivor's monthly income.
How quickly something can become spendable cash without a large loss.
Why it matters: Cash is very liquid. A house or private business usually is not.
Ongoing help with daily life, such as bathing, dressing, eating, or moving safely.
Why it matters: Care can happen at home, in assisted living, or in a nursing facility.
Also called: LTC insurance
Insurance that may pay part of the cost of covered long-term care when policy rules are met.
Why it matters: It can shift part of a large care cost away from household savings.
One large payment made at once instead of smaller payments over time.
Why it matters: A pension may offer a lump sum instead of monthly checks.
A demand to add collateral or repay part of a loan because the assets backing it fell too far.
Why it matters: It can happen with an SBLOC or margin loan during a market drop.
Money borrowed from a broker using investments as collateral, often to buy more investments.
Why it matters: Borrowing can increase gains when prices rise.
The tax rate that applies to your next dollar of taxable income, not to every dollar you earn.
Why it matters: It is useful when testing the tax cost of one more withdrawal or Roth conversion.
An order to buy or sell an investment at the best price available right now.
Why it matters: It favors getting the trade done over controlling the exact price.
A government health program run by states under federal rules for people who meet income, asset, age, disability, or other requirements.
Why it matters: It can pay for some long-term-care services when a person qualifies.
Federal health insurance mainly for people age 65 or older and for some younger people with certain conditions.
Why it matters: It changes the health-insurance plan for most retirees at 65.
Read the plain-English article →Also called: Medicare Supplement Insurance
Private insurance that helps pay some costs left by Original Medicare.
Why it matters: It can make medical bills more predictable.
Read the plain-English article →Also called: MAGI
Adjusted gross income changed by adding back certain items for a specific tax or benefit rule.
Why it matters: Roth IRA rules, Marketplace savings, Medicare charges, and other programs may use a form of MAGI.
Read the plain-English article →A computer test that runs a plan many times using many possible market paths.
Why it matters: It can show how often a plan worked under the program's rules.
A pool of money from many investors used to buy a group of stocks, bonds, or other assets.
Why it matters: One fund can provide broad ownership and professional management.
Read the plain-English article →The value of what you own minus what you owe.
Why it matters: It gives one broad picture of financial position.
Investment growth before subtracting inflation.
Why it matters: A 6% nominal return with 3% inflation is only about 3% growth in buying power before other costs.
What you give up when money, time, or attention is used for one choice instead of another.
Why it matters: Paying off a mortgage may save interest but also gives up easy access to that cash.
A plan that may pay a worker a regular check after leaving work, often for life.
Why it matters: A pension can cover part of monthly retirement spending without selling investments.
Read the plain-English article →All the investments owned by a person, family, account, or fund.
Why it matters: Looking at the full portfolio helps you see the true mix and risk.
Also called: POA
A legal paper that lets a chosen person act for you in certain matters.
Why it matters: A financial power of attorney can help someone pay bills or manage accounts if you cannot.
The amount paid to keep an insurance plan active, often each month or year.
Why it matters: It is only one part of insurance cost.
The original amount borrowed or invested, before interest or growth.
Why it matters: A loan payment may include both principal and interest.
A court process used to handle certain property, debts, and instructions after a death.
Why it matters: The process can confirm a will and appoint someone to manage the estate.
Also called: QCD
A direct payment from an eligible IRA to a qualifying charity under tax rules.
Why it matters: It may count toward a required minimum distribution without being included in income the same way as a normal IRA withdrawal.
A dividend that meets tax rules for a lower federal tax rate than ordinary income.
Why it matters: Two dividends of the same dollar amount may have different tax costs.
Investment growth after subtracting inflation.
Why it matters: It shows how much buying power may have grown.
Buying or selling to return investments to the mix you chose.
Why it matters: A rising part of the portfolio can quietly make the whole account riskier than planned.
Replacing an old loan with a new loan.
Why it matters: A new loan may change the rate, payment, payoff date, or borrower.
Also called: RMD
A minimum amount tax rules require some people to take from certain retirement accounts after a set age or event.
Why it matters: The withdrawal can raise taxable income even when you do not need the cash for spending.
Check the official source: IRS required minimum distributions ↗Read the plain-English article →The money an investment gains or loses over a set time, including price change and payments such as interest or dividends.
Why it matters: Total return gives a fuller picture than looking only at price or income.
A loan that lets an eligible homeowner borrow against home equity, often without a normal monthly mortgage payment.
Why it matters: It can turn part of a home's value into cash while the borrower stays in the home under the loan rules.
How much investment loss and uncertainty a person can handle without abandoning the plan.
Why it matters: A plan must fit both your feelings and your financial ability to take risk.
Moving money from one retirement plan or account to another while following rules meant to avoid a current tax bill.
Why it matters: A rollover can combine old work accounts or move money to a new plan.
Read the plain-English article →Moving money from a traditional retirement account to a Roth account. Money not taxed before is usually added to income for that year.
Why it matters: You pay tax now in exchange for Roth rules later.
Check the official source: IRS IRA rollover and conversion FAQs ↗Read the plain-English article →A personal retirement account funded with money that is not deducted from income under normal Roth rules.
Why it matters: Qualified withdrawals can be free of federal income tax.
Read the plain-English article →A tax rule that may allow penalty-free withdrawals from a current employer plan after leaving that job in or after the year you turn 55.
Why it matters: It may help some people use work-plan money before age 59½.
Read the plain-English article →A starting guess for how much of an investment account might be withdrawn each year while trying to make the money last.
Why it matters: People use it to turn a savings balance into a rough retirement paycheck.
Also called: SEC
The main federal agency that oversees U.S. securities markets and enforces federal securities laws.
Why it matters: Its Investor.gov website provides public education and tools for checking investment professionals.
Also called: SBLOC, securities-based line of credit, portfolio line of credit
A line of credit backed by investments in a brokerage account. You borrow cash without selling those investments.
Why it matters: It can fund a large cost while investments remain in the account, and it may avoid a sale at that moment.
Check the official source: FINRA: Securities-Backed Lines of Credit Explained ↗Read the plain-English article →A retirement plan that lets an employer, including a self-employed person, contribute to employee IRAs under tax rules.
Why it matters: It can be a simple way for a small business to fund retirement accounts.
The risk that bad market years happen near the start of retirement while you are also taking money out.
Why it matters: Early withdrawals after losses leave fewer dollars to join a later recovery.
Read the plain-English article →A retirement plan for eligible small employers that allows worker paycheck contributions and requires employer contributions.
Why it matters: It can be easier to run than some larger workplace plans.
A federal program that pays benefits to eligible retired or disabled workers and certain family members and survivors.
Why it matters: For many households, it is a monthly income base that lasts for life.
The gap between two prices or rates. A lender may charge a base rate plus a spread.
Why it matters: An SBLOC might cost SOFR plus a stated spread, so both parts affect the rate.
A small piece of ownership in a company.
Why it matters: Owners may benefit when the company grows or pays dividends.
Money that may keep being paid to an eligible person after someone dies.
Why it matters: Social Security, pensions, and annuities can have different survivor rules.
Read the plain-English article →Tax is put off until later instead of paid each year as money grows.
Why it matters: Traditional retirement accounts often let money grow without a yearly tax bill inside the account.
Selling an investment at a loss to use that loss under tax rules, often while buying a different investment to stay invested.
Why it matters: The loss may lower taxable gains or some other income.
Read the plain-English article →An account without the special tax shelter of a retirement account, such as a regular brokerage or bank account.
Why it matters: Interest, dividends, and sales may create taxes along the way.
The income amount left after tax rules, adjustments, and deductions that is used to figure federal income tax.
Why it matters: It is not the same as gross pay, AGI, MAGI, or cash in the bank.
Also called: Treasury, T-bill, Treasury note, Treasury bond
An IOU issued by the U.S. government, including Treasury bills, notes, and bonds.
Why it matters: It pays interest or grows to a stated value and is backed by the U.S. government.
A legal arrangement where a trustee holds and manages property for people or purposes named in the trust.
Why it matters: A trust can control management during life and transfer after death.
Extra liability insurance that may pay after certain home, auto, or other policy limits are used up.
Why it matters: It can protect assets from some large claims.
Also called: paper gain, paper loss
The gain or loss on something you still own. The price changed, but you have not sold it.
Why it matters: It shows how value changed without creating a normal sale.
An insurance contract whose value can rise or fall with chosen investment options.
Why it matters: It may offer future income choices and tax-deferred growth.
An interest rate that can change based on a stated market rate or rule.
Why it matters: The starting rate may be low, but the payment or interest cost can rise.
Earning full ownership of money or benefits promised by an employer over time.
Why it matters: Your own paycheck contributions are generally yours, but employer money may require years of work.
Read the plain-English article →How widely and quickly an investment price moves up and down.
Why it matters: High volatility can create a rough ride and a larger risk of selling at a bad time.
The share of savings taken out over a year.
Why it matters: A $40,000 withdrawal from $1 million is a 4% withdrawal rate.
Read the plain-English article →Income from an investment shown as a percent of its price or value.
Why it matters: It helps compare income from bonds, savings, dividends, and other investments.
A bond that usually pays no regular interest check. It is bought below the amount paid at maturity.
Why it matters: It can match a known amount needed on a future date.
We check definitions against government and industry-regulator sources, then translate them into normal speech. Rules and dollar limits can change, so use the official source before acting.
This glossary teaches general concepts. It is not personal tax, legal, insurance, investment, or lending advice.