A

Adjusted Gross Income (AGI)
Your AGI is a number you figure out when doing your taxes. It’s your total income (like wages or investment earnings) minus certain adjustments, like student loan interest or retirement contributions. It helps determine how much tax you owe.

Administrator
This is someone a court picks to handle a person’s estate (their stuff and money) if they die without a will.

After-Tax Return
The money you make from an investment after taxes are taken out. It’s what you actually get to keep.

Aggressive Growth Fund
A type of mutual fund that aims for big profits by investing in risky stocks. These funds can go up or down a lot in value depending on the market. They’re sold through a prospectus (a detailed info packet), so read it carefully to understand the risks and costs before jumping in.

Alternative Minimum Tax (AMT)
A special tax rule that makes sure wealthy people or those with lots of tax breaks still pay something. You calculate your taxes the regular way and under AMT rules, then pay whichever amount is higher.

Annuity
A deal with an insurance company where you pay now to get regular payments later, often for retirement. How much you get depends on the company’s ability to pay up.

Asset
Anything you own that’s worth money, like a house, car, or savings account.

Asset Allocation
Spreading your investments across different types (stocks, bonds, etc.) to balance risk and reward. It’s based on past data, but it doesn’t guarantee you won’t lose money—it’s just a way to manage risk.

Asset Class
A group of investments that act alike, like stocks, bonds, or cash.

Audit
When an expert checks a company’s financial records to make sure they’re accurate and follow the rules.

B

Balanced Mutual Fund
A mutual fund that mixes stocks and bonds to keep things steady. It’s less wild than a stock-only fund, but its value still moves with the market. Check the prospectus for details before investing.

Bear Market
When the stock market is dropping overall, people call it a bear market.

Beneficiary
The person (or group) who gets money or benefits from something like a will, insurance policy, or trust after the owner dies.

Blue Chip Stock
Shares in a big, stable company that’s been profitable for years and usually pays steady dividends (cash bonuses to shareholders).

Bond
A loan you give to a company or government. They pay you interest and return your money when the bond matures (ends). Bonds typically come in $1,000 chunks.

Book Value
A company’s worth on paper: its assets minus debts and preferred stock costs. Divide that by the number of shares to get the value per share—it might differ from what the stock sells for.

Bull Market
When the stock market is climbing overall, it’s called a bull market.

Buy-Sell Agreement
A deal between business owners that says if one dies, retires, or can’t work, the others have to buy their share of the company.

C

Capital Gain or Loss
The profit or loss you make when you sell something like a stock or house. If you sell for more than you paid, it’s a gain; if less, it’s a loss.

Cash Alternatives
Safe, short-term investments—like Treasury bills or money market funds—that you can quickly turn into cash.

Cash Surrender Value
The money you’d get if you cancel your life insurance policy. You can borrow against it, but unpaid loans cut into your payout later.

CERTIFIED FINANCIAL PLANNER® (CFP®)
A title for someone who’s studied financial planning and ethics through a tough program by the CFP Board. They’re pros at helping you manage money.

Certified Public Accountant (CPA)
An accountant who’s passed a big exam and met state rules to help with taxes and finances.

Charitable Lead Trust
A trust that gives money to a charity for a while, then passes what’s left to someone else (like family). You might get a tax break for the charity part.

Charitable Remainder Trust
A trust that pays you (or someone you pick) income for a set time, then gives the rest to a charity. You might snag a tax deduction too.

Chartered Financial Consultant (ChFC)
A financial planner who’s completed a detailed course on money topics like investing and retirement, offered by The American College.

Chartered Life Underwriter (CLU)
An expert in insurance and risk, trained by The American College to help with life insurance and estate planning.

COBRA
A law that lets you keep your job’s health insurance for 18 months after leaving (or longer for dependents in some cases), but you pay the full cost.

Coinsurance or Co-Payment
The part of a medical bill you pay out of pocket when your insurance doesn’t cover everything.

Commodities
Raw goods—like grain, oil, or gold—traded on exchanges for delivery now (spot) or later (futures).

Common Stock
Owning a piece of a company. You might get dividends or see the stock price rise or fall based on how the company does.

Community Property
In some states, stuff you and your spouse buy during marriage is split 50/50, including debts. Nine states (like California and Texas) follow this rule.

Compound Interest
Interest that grows on both your original money and the interest you’ve already earned. It can add up fast depending on how often it’s calculated.

Consumer Price Index (CPI)
A government measure of inflation, tracking price changes in everyday items like food and gas across U.S. cities.

D

Deduction
Something you subtract from your income (like charitable donations) to lower your taxes.

Defined Benefit Plan
A retirement plan where your employer promises you a set payout, usually monthly, based on a formula. They fund it, and contributions are capped.

Defined Contribution Plan
A retirement plan where you or your employer put in a set percentage of your pay. Your payout depends on how well the investments do—no guarantees.

Diversification
Spreading your money across different investments to lower risk. It’s not foolproof, but it helps.

Dividend
Cash a company pays its shareholders from profits. Preferred stock gets fixed amounts; common stock dividends can vary.

Dollar Cost Averaging
Investing a fixed amount regularly, buying more shares when prices are low and fewer when they’re high. It lowers your average cost but doesn’t guarantee profits—keep at it even when prices swing.

Durable Power of Attorney for Finances (DPOA)
A legal setup where you pick someone to handle your money stuff—like bills or taxes—if you can’t. It can start now or later if you’re incapacitated.

Durable Power of Attorney for Health Care (HPOA)
A document letting someone make medical decisions for you if you’re unable to. They need access to your health info, so it should follow privacy laws.

E

Efficient Frontier
A fancy term for finding the best mix of investments to get the most return for the risk you’re willing to take, based on math and past data.

Employer-Sponsored Retirement Plan
A retirement savings plan your job offers, like a 401(k) or 403(b), with tax perks.

Enrolled Agent (EA)
A tax pro who’s passed an IRS exam and can represent you in tax matters.

Equity
The value of what you own—like a house or stocks—minus what you owe on it.

ERISA
A law that protects retirement plans, making sure they’re funded and fair to employees.

ESOP (Employee Stock Ownership Plan)
A retirement plan where your employer puts company stock into your account.

Estate Conservation
Planning so your stuff gets passed on smoothly and cheaply when you die, often using wills or trusts.

Estate Tax
A tax on what you leave behind when you die, charged by federal or state governments (with some limits).

Executive Bonus Plan
When your boss pays for something—like life insurance—that you own as a perk.

Executor
The person you name in your will (or a court picks) to carry out your wishes after you die.

F

Federal Income Tax Bracket
The range your income falls into, taxed at rates like 10%, 12%, up to 37%. Higher income means a higher rate.

Fixed Income
Steady money from things like bonds, Social Security, or pensions that doesn’t change month to month.

401(k) Plan
A work retirement plan where you save part of your paycheck before taxes. It grows tax-free until you take it out, when it’s taxed (plus a penalty if you’re under 59½).

403(b) Plan
Like a 401(k), but for nonprofit or school employees. Same tax rules apply.

Fundamental Analysis
A way to pick stocks by looking at things like earnings or dividends to see if they’re worth buying.

G

Gift Taxes
A tax you pay when you give someone a big gift. There’s an annual limit before it kicks in, and it adjusts for inflation.

H

Holographic Will
A handwritten will you make yourself. It’s only valid in some states if there are no witnesses.