Financial Glossary

An employer-sponsored retirement plan for a partnership (or for a sole proprietorship for self-employed people). A Keogh requires significantly more paperwork than an IRA, and it’s more complex to understand and manage.

A strategy in which bonds (or Treasury notes) are purchased with increasing maturities that are staggered so that the interest provides a steady stream of income.

An obligation to make a payment or settle a debt (e.g., a mortgage or car loan payment).

The stock of a company whose median market capitalization is in the top 5% of the largest domestic companies. A large-cap mutual fund is a mutual fund that invests only in large-cap stocks.

An investment that can be easily converted to cash.

A commission or sales fee on a mutual fund. A mutual fund without a load is a no-load fund.

Insurance that covers some or all of the expenses incurred as a result of required long-term care.

The total value of a company’s stock, calculated by multiplying the number of outstanding shares by the price per share.

For a fixed income investment, the specified date at which the issuer promises to repay the money it has borrowed.

The stock of a company whose market capitalization falls between large-cap (top 5%) and small-cap (bottom 80%).

A mutual fund that invests solely in securities that can easily be turned into cash, such as Treasury bills, certificates of deposit (CDs) and short-term loans. Money market funds are designed to maintain a stable $1 share value, but there is no assurance that they will be able to do that.

A debt security issued by state and local governments and their agencies. Munis typically pay interest at a fixed rate twice a year, and the issuer promises to return the investor’s principal at maturity. In general, interest paid on municipal bonds is exempt from federal taxes. Some investors may be subject to the alternative minimum tax (AMT). Also known as munis.

A type of investment that pools the money of many investors to buy various securities, including stocks, bonds and/or cash equivalents.

Acronym for National Association of Securities Dealers Automated Quotation System.

The market value of a single share of a mutual fund. It is calculated at the end of each business day by adding up the value of all the securities in the fund’s portfolio, subtracting expenses and dividing the sum by the number of shares outstanding. Mutual funds are traded based on their NAVs. Funds with an offer price identical to the NAV are either no-load or load funds carrying a contingent deferred sales charge.

Gross income minus adjustments to income. Adjustments include deductions for moving expenses, alimony payments and penalties on early withdrawal from an IRA. Adjustments can be taken even if itemized deductions are not claimed. Also known as net earnings and adjusted gross income.

The remaining profit on an investment once all expenses have been deducted.

The taxable value of an estate, calculated by subtracting what is owed (liabilities) from what is owned (assets).

A no-load mutual fund is one that does not carry a sales charge or commission. The initials “NL” in the offer price column of a mutual fund table mean that the fund is no-load, meaning the fund can be bought and sold at the price listed in the NAV column. However, a transaction fee or short-term redemption fee may apply to some no-load mutual fund transactions.

A mutual fund’s annual expenses (operating expenses, management fees and 12b-1 fees, if any) expressed as a percentage of the fund’s average net assets. These expenses are deducted before calculating the fund’s NAV.

Costs incurred by a mutual fund in its day-to-day operations. Every fund is subject to some amount of operating expenses, which usually include management fees, annual fees, administrative costs and maintenance fees.