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30 Cards in this Set
- Front
- Back
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Amortized Loan
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A loan paid off in equal installments.
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Annuity
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A series of equal dollar payments coming at the end of each time period for a specified number of time periods.
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Capital Asset
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An asset you own, except for certain business assets, including stocks, bonds, real estate, or collectibles.
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Capital Gain/Capital Loss
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The amount by which the selling price of a capital asset differs from its purchase price. If the selling price is higher than the purchase price, a capital gain results; if the purchase price is higher than the selling price, a capital loss results.
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Deductions
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Expenses that reduce taxable income.
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Discount Rate
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The interest rate used to bring future dollars back to the present.
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Estate Planning
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Planning for your eventual death and the passage of your wealth to your heirs.
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Insolvent
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The condition in which you owe more money than your assets are worth.
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Itemized Deductions
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Deductions calculated using Schedule A. The allowable deductions are added up and then subtracted from taxable income.
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Ledger
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A book or notebook set aside to record expenditures.
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Liabilities
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Something that is owed or the borrowing of money.
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Asset
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Anything of value owned by an individual or business.
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Liquidity
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The relative ease and speed with which you can convert noncash assets into cash. In effect, it involves having access to your money when you need it.
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Marginal Tax Rate/Bracket
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The percentage of the last dollar you earn that goes toward taxes.
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Perpetuity
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An annuity that continues forever.
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Personal Exemptions
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An IRS-allowed reduction in your income before you compute your taxes. You are given one exemption for yourself, one for your spouse, and one fore each dependent.
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Principle
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The face value of the deposit or debt instrument.
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Reinvesting
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Taking money that you have earned on an investment and plowing it back into that investment.
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Progressive (Graduated) Tax
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A tax system in which tax rates increase for higher incomes.
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Rule of 72
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A helpful investment rule that states you can determine how many years it will take for a sum to double by dividing the annual growth rate into 72.
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Social Security
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A federal program that provides disability and retirement benefits based on years worked, amount paid into the plan, and retirement age.
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Standard Deduction
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A set deduction allowed by the IRS regardless of what taxpayers' expenses actually were.
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Tax-Deferred
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Income on which the payment of taxes is postponed until some future date.
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Acceleration Clause
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A loan requirement stating that if the borrower misses one payment, the entire loan comes due immediately.
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After-Tax Return
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The actual return you earn on taxable investments once taxes have been paid. It is equal to the taxable return (1 – marginal tax rate) + the nontaxable return.
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Annual Percentage Yield (APY)
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The simple annual percentage yield that converts interest rates compounded for different periods into comparable annual rates. It allows you to easily compare interest rates.
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Asset Management Accounts
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Comprehensive financial services packages offered by a brokerage, firm, which can include a checking account; credit and debit cards; an MMMF; loans; automatic payment of fixed payments such as mortgages; brokerage services (buying and selling stocks or bonds); and a system for the direct payment of interest, dividends, and proceeds from security sales into the MMMF.
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Assumable Loan
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A mortgage loan that can be transferred to a new buyer, who simply assumes or takes over the mortgage obligations.
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Balloon Payment Mortgage Loan
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A mortgage with relatively small monthly payments for several years (generally 5 or 7 years), after which the loan must be paid off in one large balloon payment.
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Bond
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A type of security that's actually a loan on which you receive interest, generally every 6 months for the life f the bond. When the bond matures, or comes due, you get back your investment, or “loan.”
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