Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.
Business Insider
The income tax form a business issues independent contractors at tax time. 1099s can also cover income from rental properties and dividends from investments.
An employer-offered defined-contribution plan that allows you to contribute money directly from your paycheck, usually pretax but sometimes after tax, into a tax-advantaged account for retirement.
A state-specific tax-advantaged savings account that allows you to save for college expenses.
A type of financial portfolio strategy that involves frequent hands-on strategic intervention — buying and selling assets — from a financial adviser.
Adjusted gross income is your gross income minus certain adjustments, such as deducting student-loan interest, alimony payments, or contributions to some types of retirement accounts. AGI is part of the process of calculating your total taxable income.
A tax that applies to high-income individuals to ensure that they are paying a sufficient amount of tax. Earners above a certain threshold must calculate their income tax using a special formula, and if it's higher than their tax using the regular formula, they must pay the higher tax.
The process by which the amount due on a loan is reduced over time. Generally a higher proportion of each payment goes toward interest when you begin paying off the loan, with an increasing proportion going toward principal over time.
Annual percentage rate, APR, is the total amount it will cost you to borrow money, be it through a loan, credit card, or other instruments, each year. It takes the amount of interest you'll owe and adds it to any other relevant fees.
Annual percentage yield, APY, represents the total amount of interest you'll earn on an investment or savings account in a year, including the effects of compound interest.
A financial instrument, typically offered through an insurance company, that guarantees a certain payout, either in a lump sum or in increments.
An increase in the value of a particular asset over time.
A payment method where the payer pays the payee after the work they're being paid for has been completed. The term can also apply to a late payment.
The lowest dollar amount the seller of a security will accept in exchange for that security.
An item a person or entity owns that has financial value or is expected to have financial value in the future.
A document that provides prospective investors with a summary of a company's financial standing by detailing its assets, liabilities, and shareholders' equity.
A legal proceeding that gives a person or business who can no longer pay their debts a chance to be released from the responsibility of paying those debts.
A way of describing the state of the stock market that indicates that stocks are declining in value overall.
The recipient of an item or asset, generally after its original owner has died.
The highest amount a prospective buyer of a security will consider paying for that security.
A term used to refer to companies whose stock is considered a solid investment. PepsiCo, General Electric, and Disney are blue-chip companies.
A type of investment that is essentially a loan from the investor to the bond issuer (the US government or a corporation, for example). The bond issuer pays back the invested money, with interest, at specified intervals of time. Bonds carry less risk than stocks.
The value of a company's assets once its liabilities are subtracted. Book value is reported on a company's balance sheet.
An investment strategy that focuses on the performance of individual companies and their stock rather than on market trends on the whole.
An individual or organization that facilitates the buying and selling of assets on someone else's behalf. Brokers often collect a fee or commission for these transactions.
A way of describing the state of the stock market that indicates stocks are increasing in value.
The profit that results from selling an asset that has grown in value. Capital gains are taxed at a more favorable rate than regular income.
The loss an investor experiences when they sell an asset that has lost value. Investors can claim these losses on their taxes, which can help them recover some of the money.
The interest periodically added to the total balance of a loan. For student loans, this often happens at the end of the initial grace period or after forbearance or deferment ends.
A financial instrument that locks away cash so that you can't use it for a certain time in exchange for a higher interest rate. Returns on CDs are guaranteed.
A financial professional who is certified by the Certified Financial Planner Board of Standards. The designation is highly regarded in the field and indicates that the planner is a fiduciary who has mastered financial concepts including insurance, taxes, retirement investing, estate planning, and more.
A licensed financial expert who has passed the CFA Institute exams for financial analysts.
The date that marks the end of a credit-card billing cycle. On the closing date, whatever the balance is on your card will be what you owe on your next bill.
A borrower's item, property, or asset that a lender accepts as a guarantee of a loan. If the borrower fails to make loan payments, collateral can become the property of the lender.
The state of a credit account that is far enough past due that the creditor sent it to a debt collector. Having accounts in collections can significantly lower your credit score.
The fee that a financial-services company pays a financial adviser when the adviser sells a product to a client. It's also the term for the fee that an investor pays a broker or other adviser to complete a financial transaction. Commissions are often assessed as a percentage of the cost of the product.
A financial planner who receives commissions based on the individual financial products they sell to their clients. It can create conflicts of interest that can compromise their ability to act as a fiduciary.
An economic unit that can be bought or sold but has the same value regardless of who produced it. Oil, gold, and wheat are all examples of commodities.
A method of calculating interest where you earn a percentage not just of the principal amount but the principal plus any previously earned interest.
For example, say you have a balance of $1,000 and are earning an annual interest rate of 6%. At the end of the first year, you'll earn $60 in interest. The following year you'll earn your 6% interest on the total new balance of $1,060. At the end of the second year, you'll have a total of $1,123.60.
The amount an investor paid for a security, including broker commissions and other fees and adjustments. Cost basis will help you determine your capital gains or losses for tax purposes.
The record of your credit usage habits over time that includes a list of all your credit accounts (student loans, credit cards, mortgages, etc.) as well as information on whether you make payments on time, the ages of your accounts, any recent credit inquiries, your credit utilization, and whether you have ever filed for bankruptcy.
The annual reports performed by each of the three credit bureaus (TransUnion, Equifax, Experian) that show all your credit accounts in one place, including your account history and any new accounts.
The three-digit score assigned to your credit profile based on your debt history. A high credit score demonstrates your trustworthiness to lenders, indicating that you are likely to repay your debts.
A form of decentralized digital currency not tied to any nation or standard.
A financial account that belongs to a minor but is run by a designated adult until the minor reaches an age set by the terms of the account.
Your debt-to-income ratio is the total amount of your monthly liabilities (mortgage, credit card debt, student loans, and any other money you owe on a monthly basis) divided by the amount that you earn each month before taxes.
The amount you must pay out of pocket before your insurance coverage kicks in and covers the rest.
When you stop making payments on a loan, that loan can go into default. The exact definition of default depends on the type of loan and the loan servicer.
A loan status that allows you to pause payments on your student loans temporarily. Generally if you have a subsidized loan, interest will stop accruing on your balance until you resume making payments.
An employer-sponsored retirement plan where your employer pays you a set amount periodically once you retire. A pension is a defined-benefit plan.
A type of investment vehicle, such as a 401(k), that allows employees to contribute tax-advantaged money to an account to use during retirement.
A person, like a child or a disabled or elderly relative, who lives with you and who you provide for financially.
A decline in the value of a particular asset over time.
The earned money left over after taxes, health insurance, rent or a mortgage payment, and all other living expenses have been covered.
The process of investing your money in various investment vehicles and asset classes. A diversified portfolio is less risky because if a certain type of asset loses value, your whole portfolio won't go downhill.
The payouts companies make on a recurring basis to the investors who own their shares. Dividend payments typically come out of a company's earnings.
An investment strategy where the investor puts the same dollar amount of money into the market at consistent intervals, buying and selling regardless of market conditions.
National economies in the developing world that are becoming more productive on the global stage. Investing in emerging markets is a way to diversify your portfolio.
The ability to buy a company's stock at cheaper-than-usual rates, normally offered as part of a job's compensation package.
Your ownership of an asset after you've accounted for the debt you owe on it. For example, if you bought a house with a mortgage, your equity in the home is the home's value minus your outstanding loan balance.
An account used to set aside money for larger and/or periodic expenses, like property taxes. An intermediary between the saver who puts money in the account and the payee manages the account and makes the payments.
The process of preparing your finances for when you die. Includes drawing up a will, designating a power of attorney, revisiting life-insurance policies, and making decisions about the beneficiaries of your assets.
An ETF is a diversified group of securities often tied to an index, such as the S&P 500. These funds are traded like stocks.
A qualification that relieves you from a certain amount of your tax burden.
The fee charged to shareholders of mutual funds, exchange-traded funds, and other funds each year. Investors should be aware of the expense ratios of their investments to avoid their returns getting eaten up by fees.
The portion of an investment portfolio that is held in a particular industry or asset class.
Loans backed by the US government that generally have better interest rates than other loans.
The US government's central bank, which is in charge of interest rates, keeping employment rates as high as possible, and controlling inflation.
A financial planner who is a fiduciary and whose compensation comes directly from their clients. They do not receive commissions based on individual financial products they sell to their clients.
A person or organization, often acting in a financial-advisory or asset-management capacity, who is legally bound to be honest with you and act in your best interest.
A nongovernmental but government-authorized organization that regulates brokers to protect investors from fraud and keep them from being taken advantage of.
A loan status that allows you to pause payments on your student loans or mortgage temporarily. Generally, interest continues to accrue on your balance during forbearance, so you will end up paying more than you would have originally.
The age at which you will receive the maximum amount of Social Security income when you begin to collect it.
A legal directive to reduce someone's wages in order to pay taxes, child support, or other debt.
A description of the transition from a less conservative asset allocation to a more conservative one as a target-date retirement fund's retirement year approaches.
The total amount of income you earn — both wages and any other income — before taxes, insurance, and retirement contributions are taken out.
A third party, engaged by a renter, who agrees to pay the landlord if the renter is unable to pay rent.
A savings/investment account that you can contribute to pretax, which grows tax-free and from which the money can be withdrawn tax-free if it's used for qualified medical expenses. Unlike an FSA, the money rolls over each year. You generally need to have a high-deductible health-insurance plan to use an HSA.
A tracker that measures the market performance of a particular sector, often by using a group of different securities to represent a theoretical investor portfolio. The S&P 500 and the Dow Jones Industrial Average are indices.
A mutual fund made up of investments that reflect a market index, which gives investors built-in diversification. They are known for their low fees.
A Roth IRA is a tax-advantaged retirement-savings plan that is not tied to an employer. A traditional IRA allows participants to contribute money pretax, which is then taxed upon withdrawal in retirement. Roth IRA participants contribute post-tax funds, which can be withdrawn tax-free in retirement.
The percentage by which the cost of goods and services increases and the value of money decreases over time.
The first time a private company offers shares of itself to investors at large.
If you take individual tax deductions, like deducting your mortgage interest or certain business expenses, rather than the standard deduction, it's known as itemizing.
Money that an individual or entity owes someone else.
A legal document that explains the health measures you want to be taken if you are incapacitated and can no longer express your wishes.
Replacing two or more loans with one larger loan. Consolidation can simplify your debt situation and possibly reduce the interest rate or monthly payment.
Money paid to investment managers and/or investment advisers in exchange for managing investments.
Buying investments with funds borrowed from your broker. In order to invest on margin, you must have a margin account, which essentially operates like a loan you pay back with your earnings.
A taxation system in which taxpayers pay the lowest tax rate on their first dollar of income and the highest rate on their last dollar of income.
The value in dollars of the total number of shares in a company. Often referred to as "market cap."
A high-interest-rate savings account that often requires a higher opening balance and monthly balance than typical savings accounts. Many money-market accounts allow debit-card and check-writing access.
A loan you take out to buy a piece of property, where the piece of property is the collateral. That means if you fail to make payments, the lender can seize the property.
A financial instrument that uses a pot of money from many different investors to buy a diversified mix of stocks, bonds, and other securities.
The total income you end up with after all deductions.
Copyright @ 2024. Times Internet Limited. All rights reserved.For reprint rights. Times Syndication Service.