Financial Dictionary

A budget is a financial plan that outlines the projected income and anticipated expenses used as a roadmap for an individual or an organization for a specified period. Budgets help ensure that essential expenses are covered while promoting responsible spending on remaining income. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Budget", "description": "A budget is a financial plan that outlines the projected income and anticipated expenses

What Is the Dow Jones (DJIA)? The Dow Jones Industrial Average (DJIA), sometimes referred to as the Dow or Dow 30, is a stock market index that tracks the performance of 30 large, publicly traded companies in the United States. Created in 1896, it is the oldest continuous barometer of the U.S. stock market, and one of the most widely quoted indicators of the stock market’s overall health. The DJIA takes the weighted average of the stock prices of the 30 component companies. { "@context": "h

What Is a Health Savings Account? A Health Savings Account, or HSA, is an account that offers individuals covered by high-deductible health plans a tax-advantaged means to save for qualified medical expenses. Within certain limits, funds contributed to the account are not subject to federal income taxes. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Health Savings Account (HSA)", "description": "A Health Savings Account, or HSA, is an acc

What is a REIT? A Real Estate Investment Trust, or REIT, is a pooled investment that invests primarily in income-producing real estate. The majority of REITs trade like stocks on the major exchanges, but there are other REITs that are available only in private markets. REIT investors earn a share of the income produced by the underlying properties – without actually having to go out and buy, manage or finance property themselves. { "@context": "https://schema.org", "@type": "DefinedTerm",

P/E Ratio Meaning The Price/Earnings Ratio (P/E Ratio) is a ratio used by investors to help evaluate how cheap or expensive a company’s stock is.  P/E ratios are used by investors and analysts to determine the relative value of a company's shares in an apples-to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time. { "@context": "https://schema.org", "@type": "DefinedTerm", "@i

Risk Tolerance Definition Risk tolerance is a measurement of the degree of variability in investment returns that an investor is willing to withstand. In other words, it measures an investor’s willingness or ability to handle investment losses and still achieve goals. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Risk Tolerance", "description": "Risk tolerance is a measurement of the degree of variability in investment returns that an inv

What Are Municipal Bonds? A municipal bond, sometimes called a muni bond, is a debt security issued by a state, county, city, or other political entity (such as a school district) to raise public funds for special projects. The income from municipal bonds is normally exempt from federal income taxes. It may also be exempt from state income taxes in the state in which the municipal bond is issued. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name":

What Is Adjusted Gross Income? Adjusted gross income (AGI) is one figure used in the calculation of income tax liability. It is determined by subtracting allowable adjustments from gross income. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Adjusted Gross Income (AGI)", "description": "Adjusted gross income (AGI) is one figure used in the calculation of income tax liability. It is determined by subtracting allowable adjustments from gross

What Is an IPO? An Initial Public Offering (IPO) is a company’s first public offering of stock. In an IPO, investment banks buy a private company’s shares and then offer them to the public at a certain offering price. This allows the company to raise capital from public investors. As the stock is traded, the market price may fluctuate from the offering price. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. When sold, shares may be wor

What is Probate? Probate is the court proceeding in which a deceased person’s Will is filed with the court, and the court confirms the Will is valid and if so, formally appoints the person named in Will as the executor of the deceased person’s estate. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Probate", "description": "Probate is the court proceeding in which a deceased person’s Will is filed with the court, and the court confirms the

What Is a Beneficiary? A beneficiary is the person or entity who will receive benefits from a life insurance policy, qualified retirement plan, annuity, trust, or will upon the death of an individual. { "@context": "https://schema.org", "@type": "DefinedTerm", "@id": "DefinedTerm", "name": "Beneficiary", "description": "A beneficiary is the person or entity who will receive benefits from a life insurance policy, qualified retirement plan, annuity, trust, or will upon the death of an

What is Net Worth? Net worth is the total value of a company’s or individual’s assets, minus the liabilities, or anything that the company or individual owes. What is My Net Worth? To find your net worth, simply add together the value of all of your assets and subtract the amount you owe in liabilities. This total will give you your net worth. What is an Example of Net Worth? Calculating net worth is done by subtracting what you owe from what you own. For example, if the value of your house, ca