Definitions of financial terms. See all ›
- Who is Andrew Tobias?
Andrew Tobias simplifies personal finance, emphasizing practical money management principles, long-term investing, and disciplined habits, making financial literacy accessible for everyday Americans seeking stability. - Who is Anand Giridharadas?Anand Giridharadas critiques wealth and power’s role in society, urging a deeper understanding of economic systems impacting personal finance and opportunity through his influential writings.
- Who is David Dodd?David Dodd, coauthor of Security Analysis, profoundly influenced value investing principles, emphasizing rationality, disciplined decision-making, and the importance of understanding a company’s intrinsic value.
- Who is Michael Cembalest?Michael Cembalest, a renowned strategist at J.P. Morgan, provides data-driven insights into markets, helping various investors understand economic forces and build effective portfolios.
- What is the ICT Revolution?
The ICT revolution transformed access to information and financial management, enabling improved investment strategies, enhanced financial education, and fostering disciplined money habits through digital tools and resources. - Who is Larry Summers?Lawrence H. Summers, an influential economist, shapes discussions on economic policy, inflation, and personal finance, linking national decisions to individual financial management and investment strategies.
- What is Temporary Assistance for Needy Families (TANF)?TANF provides cash assistance to low-income families with children, promoting financial independence through work, while varying eligibility and benefits by state, with strict time limits.
- What is an Electronic Benefits Transfer (EBT) Card?
An EBT card offers a secure method for U.S. citizens to access government benefits, enabling efficient purchases, fraud reduction, and faster access compared to paper vouchers. - The Flash Crash of 2010
The Flash Crash of 2010 saw the Dow plunge nearly 1,000 points in minutes, revealing vulnerabilities in trading systems and prompting regulatory reforms to enhance market stability. - Who is Myron Scholes?Myron Scholes, a key figure in finance, developed the influential Black-Scholes options pricing model, earning the Nobel Prize in 1997 and shaping risk management practices globally.
- Price-to-Book RatioThe price-to-book ratio (P/B) compares a company’s market value to its book value, helping investors assess stock valuation and make informed investment decisions based on financial fundamentals.
- OPEC: The Oil-Producing CartelUnderstanding OPEC is vital for grasping global oil market dynamics, affecting everything from gas prices to inflation and investment strategies, influencing financial decisions worldwide.
- What is Upward Mobility?Upward mobility enables individuals to improve their economic status through education and smart financial choices. Despite challenges, strategic planning can lead to greater financial stability and independence.
- What is Downward Mobility?Downward mobility, a decline in financial status, poses risks like job loss and debt. Understanding its causes and adopting resilience strategies can help protect against it.
- What Is Supply-Side Economics?Supply-side economics promotes production-focused growth through tax cuts and deregulation, aiming for increased investment and job creation, but faces criticism for benefiting the wealthy disproportionately.
- What Are Earnings?Earnings represent a company’s profit after expenses, crucial for assessing financial health. They guide both investment decisions and personal finances, impacting long-term wealth growth.
- What Are Cost of Goods Sold (COGS)?Cost of Goods Sold (COGS) represents the direct costs of producing goods or services, affecting profitability and efficiency, calculated through inventory management. It’s vital for business assessment.
- What are Operating Expenses?Operating expenses are essential costs for business operations, impacting profitability. They include categories like SG&A, marketing, and R&D, influencing financial management and decision-making.
- What is Operating Income?Operating income reveals a company’s profit from core operations, excluding interest and taxes, serving as a key metric for investors and business owners to assess efficiency and profitability.
- What is a Mortgage?
A mortgage facilitates homeownership through a loan, allowing repayment over time. Understanding types, costs, and strategic budgeting ensures financial stability and growth for homeowners. - What is Austrian Economics?Austrian economics emphasizes individual choice, free markets, and minimal government intervention. Its principles advocate personal responsibility, sound money, and long-term financial strategies, offering a distinctive viewpoint on economic policy.
- What is EBITDA?EBITDA, an important financial metric, measures company profitability by excluding interest, taxes, and depreciation, allowing better comparisons across industries, but should not be used alone.
- What is Amortization?Amortization involves gradual debt repayment or expense allocation for intangible assets. Understanding it aids in personal finance management, mortgage planning, and evaluating business investments effectively.
- What is EBIT?EBIT measures a company’s profitability from core operations by excluding interest and taxes, aiding investment comparisons and efficiency evaluations across different businesses and industries.
- What is Debt-to-Equity Ratio?The debt-to-equity ratio is crucial for assessing a company’s financial stability, indicating reliance on debt versus equity and guiding investment decisions for value investors.
- What is the Fortune 500?The Fortune 500 is an annual list ranking the 500 largest U.S. corporations by revenue, serving as a key benchmark for economic trends and financial strategies.
- What is a Balance Sheet?A balance sheet is a crucial financial document that showcases a company’s assets, liabilities, and equity, helping assess financial health for businesses and individuals alike.
- What is a REIT?REITs provide investors access to real estate income without direct ownership, offering diversification, dividends, and professional management while presenting certain risks like market volatility and interest sensitivity.
- What is a 1099-DIV?The 1099-DIV form is essential for reporting dividend income and distributions, influencing tax compliance and investment management, helping investors track earnings and optimize tax strategies.
- What is a Dividend Reinvestment Plan (DRIP)?Dividend Reinvestment Plans (DRIPs) automatically reinvest dividends into additional shares, promoting long-term growth. They offer compounding benefits but may lack flexibility and lead to overconcentration in stocks.
- What Are Qualified Dividends?Dividends are payments to shareholders, categorized as ordinary or qualified for tax purposes. Understanding this distinction helps investors optimize income and tax efficiency over time.
- What is the U.S. Bureau of Labor Statistics (BLS)The U.S. Bureau of Labor Statistics provides crucial data on employment, inflation, and wages, helping individuals make informed financial decisions, plan careers, and achieve financial independence through strategic budgeting and investing.
- What is Capital Expenditure (Capex)?Capital expenditure (Capex) involves long-term investments in physical assets, crucial for personal and business finance. Understanding Capex aids in smarter financial decisions and planning for significant purchases.
- Who is Andrew Marks?Andrew Marks, son of investing legend Howard Marks, has forged his own path in finance, emphasizing private investments and long-term value creation through his firm, Freemark Partners.
- What is Voodoo Economics?“Voodoo economics,” originally coined by George H.W. Bush to critique Reagan’s policies, now signifies economically appealing theories that often fail to deliver real-world results.
- What is Corporate Finance?
Corporate finance manages how businesses allocate money, make investments, and fund operations, impacting growth and profitability principles applicable to all business sizes and individuals. - What is the Federal Housing Administration?The FHA aids Americans in homeownership by providing mortgage insurance, allowing for lower down payments and flexible credit requirements, though borrowers face additional costs and limitations.
- What is Pet Insurance?
Pet insurance offers financial protection for veterinary costs, covering accidents and illnesses, but may exclude pre-existing conditions. Evaluate policies to find suitable coverage based on needs. - What is the Minsky Moment?A Minsky Moment indicates a rapid market collapse triggered by excessive debt and speculation, highlighting the importance of disciplined investing and risk management to avoid financial crises.
- Who is Katharine Graham?Katharine Graham, a pioneering journalist, transformed The Washington Post into a respected media entity, exemplifying resilience, decision-making, and financial acumen while advocating for integrity in leadership.
- Who is Derek Thompson?Derek Kahn Thompson is an influential journalist, author, and podcaster known for economic insights. He has worked at The Atlantic, hosts podcasts, and writes bestselling books.
- What is the Supplemental Nutrition Assistance Program (SNAP)?SNAP is a federal program aiding low-income individuals and families by providing monthly EBT benefits for food purchases, reducing food insecurity and supporting local economies.
- What is the Earned Income Tax Credit (EITC)?The Earned Income Tax Credit (EITC) aids low- to moderate-income workers by providing refundable tax credits, encouraging work, and enhancing financial support for eligible households.
- Who is PayPal CFO, Jamie Miller?Jamie Miller, PayPal’s CFO since November 2023, enhances the company’s financial strategy with her vast experience, focusing on efficiency and long-term value amidst competitive fintech challenges.
- Who is Microsoft CFO, Amy Hood?Amy Hood, Microsoft’s CFO since 2013, exemplifies strategic financial leadership, guiding the company’s transformation into cloud computing while promoting diversity and long-term financial planning.
- What is a Commodity?Commodities are standardized goods traded based on supply and demand. They include energy, metals, and agricultural products, serving as vital resources in commerce and investment diversification.
- What is a Taxable Money Market Fund?A taxable money market fund like Vanguard’s VUSXX offers low-risk, liquid investments in short-term government securities, providing modest returns but taxable income for investors.
- What is Scuttlebutt Research?
Scuttlebutt research, initiated by Phil Fisher, focuses on gathering firsthand insights about companies from various stakeholders to evaluate their true potential beyond financial statements. - Who is Ryan Petersen?Ryan Petersen, founder and CEO of Flexport, revolutionized freight logistics with technology and transparency, exemplifying long-term thinking and problem-solving that parallels smart personal finance strategies.
- What is a Bond Yield?Bond yields represent an investor’s return on bonds, impacting personal finance decisions, mortgage rates, and investment strategies. Understanding them is crucial for navigating economic trends effectively.
- Who Is Peggy Marie Alford?Peggy Marie Alford, eBay’s CFO and Meta board member, exemplifies influential financial leadership, advocating for diversity and showcasing a successful career path in the tech industry.
- Who is OpenAI CFO, Sarah Friar?Sarah Friar, CFO of OpenAI, embodies financial leadership and innovation. Her journey illustrates resilience, the importance of education, and the impact of aligning career with values.
- What is the Mortgage Interest Deduction Tax Benefit?The mortgage interest deduction allows homeowners to reduce taxable income by deducting interest on home loans. Eligibility requires itemizing deductions, and the deduction has specific limits and rules.
- What is Poverty Finance?Poverty finance focuses on helping low-income individuals manage finances, emphasizing survival, avoiding debt traps, using micro-budgeting, accessing community resources, and building financial literacy for stability and growth.
- What is the Fair Housing Act?The Fair Housing Act, passed in 1968, prohibits housing discrimination based on protected characteristics, promoting equal opportunity and financial security for individuals and families in the housing market.
- What is the Department of Housing and Urban Development (HUD)?The U.S. Department of Housing and Urban Development (HUD) provides essential housing services, promotes fair access, and supports low-income families towards financial stability and homeownership.
- What is Supplemental Security Income (SSI)?Supplemental Security Income (SSI) assists individuals with limited income and resources, focusing on those aged 65, blind, or disabled, with strict financial eligibility requirements and various application methods.
- What is Universal Basic Income (UBI)?Universal Basic Income (UBI) offers unconditional monetary support to all citizens, aiming to enhance economic security and community well-being, without discouraging work or motivation, as demonstrated by various global trials.
- Who is Federal Reserve Governor Lisa Cook?Lisa Cook, the first Black woman on the Federal Reserve Board, influences economic policy, emphasizing inclusion, stability, and growth that benefits all Americans and addresses inequality.
- Who is Hyman Minsky?Hyman Minsky’s theories on financial instability and the cyclical nature of markets highlight the risk of speculative bubbles, emphasizing the need for caution and government intervention to prevent crises.
- What is an Initial Public Offering (IPO)?An IPO allows private companies to offer shares publicly for the first time, raising capital but posing significant risks for investors. Cautious strategies like investing in $VOO are recommended.
- What is Jane Street?Jane Street, founded in 2000, is a prestigious proprietary trading firm focusing on quantitative trading and technology, famous for its collaborative culture and attracting top talent.
- What is Phantom Wealth?Phantom wealth creates an illusion of financial security by misperceiving asset liquidity. This can lead to overspending and neglecting essential budgeting, impacting true financial independence.
- What is a Backdoor Roth IRA?A Backdoor Roth IRA allows high-income earners to bypass income limits for Roth IRA contributions, enabling tax-free growth and withdrawals through a conversion process from a Traditional IRA.
- What Are Stop-Loss Orders?Stop-loss orders help investors limit losses by automatically selling stocks at a predefined price, but they should be used wisely as part of a broader financial strategy.
- What is a Bull Trap?A bull trap misleads investors into believing a market downturn is reversing, prompting buying during temporary price rebounds before leading to a sharp decline, resulting in potential losses.
- What are Fractional Shares?Fractional shares allow budget-conscious investors to buy portions of stock, enabling wealth building with small amounts. They promote accessibility, diversification, and confidence in investing.
- What is the Internal Revenue Service (IRS)?The IRS, established in 1862, enforces federal tax laws, collects taxes, and conducts audits. Understanding its processes aids compliance and preparedness for audits, minimizing stress and complications.
- What is the Medallion Fund?The Medallion Fund, managed by Renaissance Technologies, excels with 39% average annual returns through disciplined, data-driven strategies. Though inaccessible to many, its principles offer valuable investing lessons for all.
- What is Stagflation?Stagflation is a challenging economic state combining stagnation and inflation, marked by rising prices, slowing growth, and increasing unemployment. Understanding its causes and strategies for coping is essential for financial stability.
- Return on Investment (ROI)ROI measures investment profitability, calculated as a percentage of profit relative to cost. It’s essential for comparing investment opportunities, tracking financial progress, and making informed decisions for wealth growth.
- What is Quantitative Investing?Quantitative investing leverages data and algorithms to guide trades, minimizing emotional decision-making and identifying market patterns, while also facing risks like overfitting and market shifts.
- What is Net Income?Net income is essential for personal finance, representing earnings after deductions. It guides budgeting, savings, and financial goals, distinguishing it from gross income.
- Who is Alex Morris?Alex Morris, author of The Science of Hitting, educates investors on long-term, fundamentals-based investing, emphasizing patience, informed decision-making, and evaluating high-quality businesses for sustained growth.
- What is FDIC Insurance?The FDIC is a U.S. government agency that insures bank deposits up to $250,000, providing security and confidence for savers against bank failures and enhancing financial management.
- Who is Farnoosh Torabi?Farnoosh Torabi is a personal finance expert who empowers individuals, especially women, through education and emotional insights, offering relatable advice in her books and podcast.
- Who is Carl Icahn?Carl Icahn, a prominent activist investor, revolutionized investment strategies through his confrontational and active approach, aiming to maximize shareholder value and challenging management practices across various industries.
- What is the Capital Asset Pricing Model (CAPM)?The Capital Asset Pricing Model (CAPM) helps investors evaluate expected returns based on risk. Understanding CAPM enhances investment decisions, particularly for balancing risk and return in portfolios.
- Who is Jeff Booth?Jeff Booth’s “The Price of Tomorrow” offers insights into how technology influences deflation and economics, urging readers to rethink personal finance strategies amidst shifting financial landscapes.
- Who is Nicole Lapin?Nicole Lapin, a bestselling author and financial expert, offers relatable, actionable advice on personal finance through her engaging books, empowering readers, particularly women, to take control of their financial futures.
- What is an Investment Advisor Representative (IAR)?An Investment Advisor Representative (IAR) offers fiduciary financial advice, helping clients with investments and planning. They require licensing and can enhance financial decision-making, especially during life transitions.
- Who is William Cohan?William Cohan, a former investment banker and investigative journalist, offers insights into finance through his books, exploring the psychology of money, power dynamics, and their impacts on personal finance.
- What is Longevity Risk?Longevity risk involves the danger of outliving savings, especially as life expectancy rises. Effective planning requires understanding this risk and implementing strategies to ensure financial security throughout retirement.
- What is Premium Risk?Premium risk refers to paying more for insurance or investments than they are worth. Understanding and managing this risk leads to smarter, cost-effective financial decisions.
- What is Risk Composure?Risk composure is crucial in personal finance, enabling individuals to stay calm during market fluctuations. By understanding and developing this skill, one can make better financial decisions and build long-term wealth.
- Who is Robert Armstrong?Robert Armstrong, a prominent Financial Times commentator, offers insights through his “Unhedged” newsletter, helping readers navigate financial concepts and investment strategies effectively.
- What is Wealth Building?Wealth building involves accumulating assets through disciplined saving and investing for financial security. Key strategies include living below means, investing, and eliminating debt for lasting prosperity.
- What is Deflation?Deflation is an economic decrease in prices, enhancing money’s purchasing power but causing significant issues like economic slowdown and increased debt burdens.
- What is Slow Travel Retirement?Slow travel retirement allows retirees to explore cultures deeply by staying in one place long-term, offering cost savings, immersion, flexibility, while posing challenges like visa issues and isolation.
- What is the Federal Insurance Contributions Act (FICA)?FICA mandates contributions from employees and employers to fund Social Security and Medicare, providing essential financial support and healthcare for retirees and disabled individuals, ensuring economic stability for millions.
- What is Social Security?Social Security provides financial aid to retirees, disabled individuals, and survivors. Benefits depend on work history, and claiming age affects monthly payments. Options include retirement, disability, and need-based assistance.
- What is the Cash Wedge Strategy?The cash wedge strategy helps retirees manage investments and minimize risks by maintaining a cash reserve for expenses, preventing forced asset sales during downturns, thereby ensuring long-term financial stability.
- What is Sequence of Returns Risk?Sequence of returns risk affects retirement sustainability, where early withdrawals during market downturns can deplete savings faster. Strategies like cash buffers and diversified portfolios can mitigate this risk.
- What Does Vibecession Mean?“Vibecession,” a term coined by Kyla Scanlon, signifies the sentiment of financial strain even amid stable economic indicators, affecting personal finance behavior like spending and saving decisions.
- What is Zero-Based Budgeting?Zero-based budgeting allocates every dollar of income to specific expenses, ensuring income minus expenditures equals zero. It promotes financial control, savings prioritization, and conscious spending toward financial independence and long-term success.
- Who is Justin Wolfers?
Justin Wolfers is an Australian-American economist known for his research on happiness and economic policy, making complex ideas accessible for public understanding and engagement. - Who is Eric Ries?Eric Ries, author of The Lean Startup, revolutionized entrepreneurship with a method focused on rapid iteration, customer feedback, and efficient product development, enhancing success chances for startups.
- What is the Loan-to-Value Ratio (LTV)?The loan-to-value ratio (LTV) is crucial in mortgage assessments, influencing approval, interest rates, and insurance requirements. Lower LTVs signify reduced risk; improving LTV enhances borrowing options and costs.
- What is Private Mortgage Insurance (PMI)?
Private mortgage insurance (PMI) protects lenders when homebuyers make low down payments. Costs range from 0.3% to 1.5% of the loan amount annually, but options exist to avoid or eliminate PMI. - Who is Seth Klarman?Seth Klarman, CEO of Baupost Group, is a respected value investor known for disciplined risk management, long-term strategies, and identifying undervalued assets, with insights shared in his book Margin of Safety.
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