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A type of defined contribution or defined benefit qualified retirement plan. These plans can be designed in many different ways with contributions and benefits structured to meet the needs of the plan provider within the limits of the law. The name of the plan reflects the section of the Internal Revenue Code defining the basic rules for these plans. These plans may be established by for profit, tax-exempt and governmental entities.

A type of defined contribution qualified retirement plan that permits employees to defer paying current income taxes by contributing a portion of their salary to the plan. The name of the plan reflects the section of the Internal Revenue Code defining the basic rules for these plans. These plans may be established by for-profit and tax-exempt entities.

A type of defined contribution qualified retirement plan named for the section of the Internal Revenue Code that permits employees of certain approved institutions, such as schools, universities, hospitals and certain other 501(c)(3) non-profit organizations to defer paying current income taxes by contributing money to the plan for retirement.

A tax-exempt deferred compensation program made available to employees of state and federal governments and agencies. A 457 plan is similar to a 401(k) plan, except there are never employer matching contributions and the IRS does not consider it a qualified retirement plan. The name of the plan reflects the section of the Internal Revenue Code defining the basic rules for these plans.

A provision that can be added to some life insurance contracts for payment of an additional benefit in the event death is caused by an accident, as defined in the rider. In many cases the original policy death benefit is doubled in the event of accidental death, which is why this benefit is sometimes called double indemnity.

In a deferred annuity contract it is the period of time after investing funds in the contract that the money is left to accumulate prior to annuitizing it into an income stream. This is in contrast to the Annuitization Phase.

An investment management style whereby an investor or porfessional money manager actively buys and sells securities in order to maximize portfolio returns. This is in contrast to a Passive Management style.

A mortgage loan that has an interest rate that may change. Also known as ARMs, these loans typically set an interest rate for some period of time, such as 1 year or 5 years, after which the rate may be adjusted periodically, such as annually. Most ARM loans also have an annual interest rate cap to guarantee that the rate will not increase more than a certain amount in one year, and a lifetime ceiling which is the highest rate the loan can charge over its lifetime.

Also known as AGI, this is the amount upon which your federal income tax liability is based after certain adjustments have been made, but before deductions and exemptions. AGI can be found on the last line on the front side of the IRS 1040 income tax form.

The second largest organized exchange, handling roughly 25 percent of total annual national share volume.

The gradual elimination of a debt, such as a mortgage over a period of time. Each loan payment consists of a portion of principal and interest until the total amount of the debt is paid.

In an annuity contract, it is the person on whose life the annuity is based for purposes of issuing the contract or calculating annuitization payments.

After an annuity is converted into a guaranteed income stream it is said to be in the annuitization phase.

The conversion of an amount of money into a guaranteed income stream through an annuity contract.

A contract offered by a life insurance company designed to provide payments to the owner for a specified period of time, usually beginning after retirement. Prior to withdrawal of funds, any earnings from variable investments or interest paid on fixed accounts accumulate income tax-deferred, meaning they are not taxed until withdrawn.

An asset or holding that has, or is expected to increase in value over time.

A common investment strategy that involves spreading investments among different kinds of assets, such as stocks, bonds, real estate and cash, with the objective of maximizing return while minimizing risk. The proper mix of investments for each individual varies based on each person's investment objectives and time horizon.

Investment securities that are backed by other assets, such as mortgage-backed securities.

A broad group of individual securities or investments that have similar characteristics, such as stocks, bonds, real estate or cash

Sales charge applied to an investment when the shares in the investment are sold.

A mutual fund that invests in a combination of common and preferred stock, bonds, and money market instruments with the objective of providing both growth and income while minimizing risk.

An extended period in which investment prices fall, accompanied by widespread investor pessimism. Bear markets commonly occur during periods of rising inflation or during recessions when unemployment is high. A sudden or sharp downturn in investment prices or a downturn that is short-lived is known as a market correction. Bear market is the opposite of bull market.

An individual, company, trustee, or estate that receives, or may become eligible to receive, payments or benefits from an insurance policy, retirement plan, annuity, trust, will, or other contract.

A measurement of relative investment risk, it compares the volatility of a mutual fund to that of some relevant benchmark (often the S&P 500 stock index). A beta less than 1.0 indicates less volatility than the index; a beta greater than 1.0 indicates greater volatility than the index, and a beta equal to 1.0 means the fund is as volatile as the benchmark itself.

The stock of a large, national company with a solid record of stable earnings and/or dividend growth and a reputation for high quality management and/or products. More generally, anything of very high quality.

A debt instrument issued by corporations, federal, state or local governments or other institutions for the purposes of raising capital. Bonds are issued for periods greater than one year in length and the issuer agrees to pay back both principal and interest due or the face amount of the bond in the case where interest is not due. The purchaser of the bond becomes a creditor to the issuer, but does not hold any ownership interest in the issuer.

A mutual fund with a portfolio consisting mainly of bonds. Most bond funds have an investment objective of income as their primary goal.

In a mutual fund, it is the level of dollars invested in that fund family that qualifies the investor for a reduced sales charge. These breakpoints can be achieved through lump sum purchases or by accumulating smaller purchases over time.

An individual or company that effects securities trades for itself or on behalf of customers. When effecting trades on behalf of customers, the firm is said to be acting in the capacity of a broker. When trading for its own account, the firm is acting as a dealer.

An extended period in which investment prices rise faster than their historical average. Bull markets are commonly the result of economic recovery, or positive investor psychology. This is the opposite of a Bear Market.

The danger that a company will not be able to meet its financial obligations (principal, interest, or dividend payments) resulting in a decline in value.

A bond issued with a feature that permits the issuer to redeem the bond prior to the maturity date.

A loan issued with a feature that permits the lender to make the loan due upon demand.

The difference between the purchase price of an asset and its selling price.

The amount of cash available to a policyowner upon surrender of certain life insurance policies. Also known as surrender value.

A savings instrument issued by a bank that usually pays a fixed amount of interest over a fixed period of time, usually from a few weeks to several years, and matures on a stated date. Bank Certificates of Deposit are insured by the FDIC.

A professional designation focusing on investing and portfolio management. The designation is granted by the Association for Investment Management and Research, and candidates must pass exams covering topics such as financial accounting and quantitative analysis.

Administered by the College for Financial Planning, the CFP is one of the most popular professional financial designations. Candidates have to pass a rigorous exam administered by the CFP Board of Standards covering insurance, taxation, investments, retirement and estate planning

A professional designation that indicates the individual has been certified at the state level to practice accounting, with includes complete tax preparation and the reporting and analysis of financial transactions.

The ChFC designation is granted by The American College and candidates must pass a total of 8 exams covering a wide range of topics in the areas of insurance, investments and financial planning. ChFC is generally considered to be a peer designation to the Certified Financial Planner.

The CLU designation is granted and administered by The American College. Candidates must pass a total of 8 exams covering a range of topics focused on life insurance and its application in advanced situations.

The term given to the practice of effecting excessive trades in a customer's account for the express purpose of generating additional commissions for the broker without regard to the client's best interests. A broker found churning a customer's account is in direct violation of NASD rules.

A method of paying sales charges on mutual funds. When you purchase class A shares of a fund, you pay a one time charge - a percentage of the amount invested- up front. Loads generally range from 3% to 5.75%. Annual expense load in class A shares are usually lower than others. Investors with certain amounts to invest in a fund (or in more than one fund in the same fund family) will qualify for a lower load. Ask your financial professional about these breakpoints.

A method of paying sales charges on mutual funds. When you purchase class B shares of a fund, there's no up front load, but a back-end load, also called a deferred sales charge, which is deducted when you sell your shares. The annual expenses associated with class B shares might be higher than with class A shares. Some back-end loads diminish and/or disappear after several years, and the shares may be convertible into class A shares.

A method of paying sales charges on mutual funds. When you purchase class C shares, there's no front or back load, but what's called a level-load - actually just a higher expense ratio that you pay as long as you own the shares. In addition, there might be an additional charge if you sell your shares before a specified time. Class C shares are not generally considered cost-effective for long-term investors.

An investment fund with a fixed number of shares issued to investors that does not redeem shares in the same way as a traditional mutual fund. Unlike an open-end fund, the investment company is not obligated to buy shares back from investors. After the initial public offering when the shares are initially purchased from the investment company, investors must turn to the market to redeem their shares. In this way shares of a closed-end fund behave similarly to an individual stock whose price is driven by market demand. The actual price an investor receives for their shares may be more or less than the fund's actual net asset value.

An investment or company held by a small number of individuals.

An asset (such as real property) that backs a financial security.

Units of ownership in a public corporation represented by shares that constitute a claim on the corporation's earnings and assets. Shareholders of common stock can vote in the election of directors and other issues that arise at shareholder meetings, and may be entitled to receive dividends on their holdings. Common stock tends to have more potential for appreciation than some other classes of stock (i.e., preferred stock).

Interest that is calculated by applying the stated percentage rate to both the original capital amount and the accumulated interest of previous periods.

A separate IRA account opened and maintained for the purpose of holding retirement funds rolled over from some other qualified retirement plan. The funds in a conduit IRA must be kept separate from other retirement accounts and may not receive new IRA contributions. Keeping these funds separate affords the investor the opportunity to potentially roll these funds into a new employer's qualified plan, such as a 401(k).

Debt generally incurred for the purchase of consumer goods. Consumer debt is usually not income tax-deductible.

A measure of the change in prices consumers pay for certain goods, measured by the Bureau of Labor Statistics.

legally appointed recipient of insurance or annuity proceeds who receives contract benefits in the event the primary beneficiary is deceased or defunct.

Also known as a back-end load, it is a sales charge incurred upon surrender of an investment or insurance contract. May also be referred to as a surrender charge or redemption fee.

A disclosure document required by the U.S. Securities and Exchange Commission that describes the features and risks of investing in a registered variable insurance product (for example, a variable annuity). A contract prospectus describes such subjects as fees, investment options and contract benefits, including transfer rights, withdrawal rights, death benefits and the income phase. It also provides information on the separate account, financial statements, and how to purchase.

Corporate securities, usually shares of preferred stock or bonds, that can be exchanged for common stock of the issuer at the option of the investor.

An instrument whereby a corporation borrows funds, and acknowledges a stated sum is owed, which it will repay at a specified date with a stipulated amount of interest.

The interest payment due on a bond. A bond with a 6% coupon pays 6% interest.

Formerly known as the Education IRA, it is a savings vehicle designed for the express purpose of funding a college education. Contributions are not federally tax deductible, but earnings used for qualified education expenses receive beneficial income tax treatment.

Life insurance purchased for the express purpose of paying off a specific debt in the event of death.

The possibility that the issuer of bonds or other debt obligations may not repay principal and/or interest and that loss will result.

The risk of losing money on an investment due to changes in the exchange rate of foreign currencies. This risk typically affects investments held in foreign countries or purchased in foreign currencies. Also called Exchange Rate Risk.

An individual or company charged with providing physical care and custody for investments or property.

In the case of a bond or it is the date when principal is due. In annuity contracts it is the date when the contract matures, requiring the contract owner to annuitize or surrender the contract.

An amount payable upon the death of the owner of a qualified plan, life insurance policy, variable annuity, or other financial instrument. Payment is made to the named beneficiaries on the contract or plan or to the estate of the deceased in the event that no beneficiary exists. Methods of payment can vary, depending upon the terms of the plan/contract and applicable tax laws.

Life insurance in which the premiums remain level each year, but the death benefit decreases annually.

The failure of the borrower (issuer) to make required interest or principal payments on a debt, such as a bond or mortgage loan.

The investment risk associated with the possibility of default of the issuer of a bond on payment of interest and/or principal.

An annuity contract issued with the intent to receive payments or an income stream at some time in the future.

Also known as a back-end load, it is a sales charge incurred upon surrender of an investment or insurance contract. May also be referred to as a surrender charge or redemption fee.

A type of employer sponsored qualified retirement plan that pays a certain, or defined, amount of income at retirement. Retirement benefit payments are usually based on a formula of salary and years of service. Contributions to the plan are driven by the amount of benefits to be paid out for each employee.

A type of employer-sponsored qualified retirement plan that specifies the contributions made to the plan, either as a flat dollar amount or as a percent of compensation. The employee, the employer or both may make contributions to the plan. Unlike a defined benefit plan, where retirement benefits are pre-determined, in a defined contribution plan, benefits are determined based on the contributions and investment performance of the plan.

A period of decline of general price levels within the economy. It is the opposite of inflation.

An asset or holding that has, or is expected to decrease in value over time.

A program that permits companies to sell stock directly to investors without the services of a broker, and without commission.

A rollover from an IRA or employer-sponsored qualified plan effected directly between the plan trustees or custodians. Also known as a trustee-to-trustee transfer, the funds in the plan never pass into the hands of the plan owner. Direct rollovers avoid the onerous income tax withholding requirement generally associated with a 60-day rollover in which funds are handed over to the plan owner. Direct rollovers can only be done once per year per account.

individual or firm that effects the purchase and sale of securities on behalf of customers at a commission rate lower than that typically charged by full-service brokers. Discount brokers also typically provide fewer services than full-service brokers.

A brokerage account in which the owner has authorized another individual to effect trades on behalf of the owner. Some individuals choose to give their brokers discretionary trading authority to buy and sell securities to achieve certain overall investment objectives. Discretionary accounts can be set up with certain restrictions on trading authority as a means to protect the interest of the customer.

The risk of a price change on an investment due to some unique circumstance associated with the individual investment as opposed to the market as a whole. It is called diversifiable risk because proper portfolio diversification can sometimes mitigate an investor's exposure to this type of risk. Also called Unsystematic Risk.

The practice of spreading investments within a portfolio across different types of investments that react to market and economic changes differently, such as stocks, bonds, cash or real estate. Investors diversify in an attempt to reduce overall portfolio risk. The way in which a portfolio is diversified varies with each individual investor and of itself, does not guarantee that portfolio risk is in fact reduced.

Corporate earnings paid out to investors on a per share basis. In the case of an individual stock, the dividend is declared by the individual company on a per share basis. In the case of a mutual fund, all of the earnings of the holdings within the fund, dividends from stocks and interest from bonds, is pooled and then paid to fund investors in the form of a dividend.

An investment plan offered by some companies that permits investors to automatically reinvest cash dividends or capital gains distributions into additional shares of stock without paying brokerage commissions.

The process of purchasing securities or shares at regular intervals with a set dollar amount. When share prices are lower, the investor buys more units or shares, and fewer when prices are higher. Over time, this seeks to net the investor a better average price for all shares purchased over the life of the investment. It is best employed during times of volatility and price fluctuation. Dollar cost averaging does not ensure a profit nor guarantee against loss. Investors should consider their financial ability to continue purchases through periods of low price levels.

A provision in some life insurance contracts whereby the death benefits payable are doubled in the event of accidental death. Also known as accidental death insurance.

The risk that an investment will decline in price or value and the amount of loss associated with that potential decline.

The price-weighted average of 30 actively-traded blue chip stocks, primarily industrial. It is the most widely quoted indicator of the overall condition of the stock market.

The Europe Asia Far East Index is an unweighted average of securities measuring the general condition of overseas markets.

The penalty charged for taking funds from an account or contract before maturity as with a certificate of deposit. In a qualified plan, IRA or non-qualified tax-deferred annuity, it is the 10% federal excise tax charged for non-qualified withdrawals made prior to age 59 ½.

The amount of earnings paid out by a company divided by the total number of shares outstanding for that company. A company's earnings per share can be used as one factor in determining the investment value of a company.

Any one of several statistical measures that provide information on economic trends. Some of the more popular indicators include, Gross Domestic Product, Housing Starts, and the Consumer Price Index.

Now known as the Coverdell Education Savings Account, it is a savings vehicle designed for the express purpose of funding a college education. Contributions are not federally tax deductible, but earnings used for qualified education expenses receive beneficial income tax treatment.

The actual interest rate that accrues on an investment or loan after taking into account the effects of compounding.

A new financial market opportunity in a developing country.

The federal law covering private pension plans defining administration and investment practices.

In an employer-sponsored retirement plan, it is the amount of money contributed to the plan by the employer calculated as a portion of the employee's contribution.

Any security representing ownership in the underlying investment.

An IRA contribution that exceeds the limit set by law. A tax penalty applies to the amount contributed to the IRA in excess of the legal limit.

The amount distributed from a retirement plan that exceeds the limit permitted by law. A tax penalty applies for the amount distributed beyond the legal limit.

The risk of losing money on an investment due to changes in the exchange rates of foreign currencies. This risk typically affects investments held in foreign countries or purchased in foreign currencies. Also called Currency Risk.

An actuarial calculation that determines the portion of an annuity income payment that is not subject to income tax because it is deemed to be a return of principal. After annuitization, each annuity payment consists of a portion of interest, which is income taxable, and a portion of principal, which is not income taxable. The exclusion ratio determines the value of that amount for income tax purposes.

The benefit amount of a life insurance policy paid upon death of the insured.

A form of financial planning in which the planner charges a flat fee or hourly rate for creating the plan itself. Fee-based financial planners may or may not also provide product solutions to fulfill the plan.

Any person who exercises discretionary authority or control over the assets of another person or company. This control includes having the legal authority to make investment and financial decisions about those assets.

The risk of financial loss on a bond due to the issuer not being able to pay the principal or interest due. Also called credit or default risk.

An investment that pays a fixed or stated interest rate as in the case of some bonds, annuities, or money market securities.

An income tax treatment that permits the taxpayer to spread the tax liability due on income from certain qualified items over the course of several years instead of in one lump sum.

Sales charge applied to an investment at the time of initial purchase and taken directly from the purchase price.

A method of analyzing the investment value of a company by reviewing that company's financials, including their assets, revenues, debt, management and products. It reviews data pertinent to the company itself and does not include a review of the general economy or market conditions.

A group of mutual funds managed by the same investment company. Most fund families offer a wide range of investment objectives within the family. Investors are generally permitted to move money between funds in the family at little or no cost.

An individual or team responsible for making the investment decisions for a portfolio of investments with the objective of achieving pre-stated goals established by the fund.

Stocks believed to have a strong potential for better-than-average capital appreciation due to expected higher earnings and faster expansion of the underlying company.

An insurance policy issued to cover a group of individuals as in group health insurance or group life insurance.

An IRA established for the benefit of a group of individuals, typically by an employer for employees.

Investment management style that emphasizes the selection and purchase of stocks of companies expected to grow at a rate faster than other stocks in a similar industry or the market in general.

Also called a GIC. A contract issued by an insurance company that promises to pay a fixed rate of interest. Commonly used as investments in pension plans.

A life or health insurance policy that requires the insurer to renew the policy for a certain amount of time regardless of the current health or condition of the insured.

An annuity contract that combines the features of both fixed and variable annuities.

An asset that is generally considered not easily converted to cash. This typically includes things like art and collectibles and some real estate.

An annuity contract that is immediately annuitized into an income stream.

The stock of a company that has a consistent record for paying relatively high dividends.

A portfolio of stocks or bonds designed to replicate the composition and return of a particular market index (e.g., the S&P 500).

A personal retirement savings account that permits investors to save up to $3,000 (or 100% of compensation, whichever is less) per year. Some or all of the $3,000 contribution to the account may be income tax deductible in a traditional IRA and the earnings in the account are income tax-deferred. Withdrawals may be taken without penalty after age 59 ½.

The persistent and appreciable rise in the general level of prices of goods and services (as measured by the CPI) and the resulting loss in the purchasing power of money.

The danger of rising costs. If an investment's return is lower than the rate of inflation, its earnings may actually reflect a net negative return or a real loss measured in today's dollars. This applies especially to the less aggressive income-type investment options.

In the case of life insurance, it is the individual(s) who would suffer a loss if the insured died, establishing eligibility to be beneficiaries on the policy. If there is no insurable interest, the insurance company will not issue the policy.

A contract with a company or individual establishing a promise to pay for some pre-defined potential future loss in exchange for periodic payments.

The individual, group or physical property for which an insurance policy is issued.

The inverse relationship between market interest rates and bond prices. As interest rates rise, bond prices decline because an investor seeking to sell an 8% bond in a 9% market will have to sell the bond at a discount to provide a competitive return to the purchaser of the bond.

This is an agency of the U.S. Treasury's Department, charged with enforcing tax laws, issuing interpretations of the tax law, auditing tax returns, and making criminal investigations.

Firm that, for a management fee, invests the pooled funds of small investors in securities appropriate for its stated investment objective.

Federal law that regulates the registration and operation of investment companies.

The amount of time an investor expects to keep his or her money invested.

An individual or team responsible for making the investment decisions for a portfolio of investments with the objective of achieving pre-stated goals.

Stated goal of a portfolio or fund, such as growth, income or tax-free income.

The stated investment strategy intended to achieve the investment objective. The investment policy may define some of the specific investment tactics that the investment managers will or will not engage in to achieve their goal.

The risk that the value of an investment will fall.

In conjunction with insurance contracts, it is a provision that is not able to be changed without express written permission of another party or the court. For example, on a life insurance contract an irrevocable beneficiary cannot be changed without the beneficiary's written permission.

The date when a contract is issued by the company and officially in force.

Term used to refer to the underwriter of an investment or insurance contract.

An annuity contract issued on the lives of two individuals. Annuity payments continue in whole or in part until both annuitants are deceased. May also be called a Joint Life Annuity.

A single annuity contract issued on the lives of two individuals, such as a husband and wife. Annuity payments continue in whole or in part until both annuitants are deceased. May also be called a Joint and Survivor Annuity.

A legal property ownership arrangement between two or more individuals whereby the surviving owners inherit the deceased owner's interest in the property at death.

Bond with a credit rating of BBB or lower by rating agencies. Although commonly used, the term has a pejorative connotation, and issuers and holders prefer the securities to be called high-yield bonds. These bonds carry the potential for higher returns and higher risks.

An income tax-deferred qualified retirement plan for self-employed individuals.

Life insurance purchased on the life of an individual considered key to the success of a business. The company typically pays the premiums and is also the beneficiary of the policy.

A company with a market capitalization of sufficient size to be considered large. Although not a hard and fast rule, a large cap company generally has over $5 billion in market capitalization.

The risk of potential loss due to some legal uncertainty or proceeding such as bankruptcy.

The risk of potential loss due to a change in the law that may impact the value of the investment.

A flat or level sales charge on an investment that does not vary over time or with regard to the length of time the investor has held the asset.

An insurance contract for which the premiums do not change for the life of the policy.

An annuity contract set up to pay out an income stream over the life of a single individual. Payments cease when the annuitant dies.

The length of time an individual is expected to live based on mortality experience. An individual's life expectancy will impact insurance premium costs and the value of annuity payments.

An insurance contract based on the life of an individual that pays out a benefit to a named beneficiary or an estate upon death of the insured.

An extension of credit to a borrower by a financial institution whereby the borrower can draw upon available funds as needed up to a maximum approved amount. A home equity line of credit typically uses the borrower's home equity as collateral for the loan.

The ability to convert assets into cash or cash equivalents without significant loss in the value of those assets. For instance, investments in money market funds and listed stocks are generally considered to offer greater liquidity than real estate.

The potential risk associated with the need to turn an asset into cash quickly if needed.

An additional benefit available for purchase on some life insurance policies that provides for benefits to be paid out while the insured is still alive.

A sales charge or commission charged to an investor for investing in or redeeming an investment. Most commonly used in reference to mutual funds.

A mutual fund that includes a sales charge or load.

A distribution or withdrawal from an investment taken in the form of a single large payment.

An investment account where the account owner designates to a broker or investment company the authority to effect trades in the account on their behalf to pursue a stated investment objective.

A company or legal entity that establishes, manages, and administers investments, such as mutual funds.

A fee charged for the services of management of an investment portfolio, including buying and selling securities, such as in a mutual fund.

In reference to investing, it is the market value of a company, calculated by multiplying the price per share of the company's stock by the total number of outstanding shares.

The investment risk associated with simply being invested in the market and being subject to its daily ups and downs.

An investment strategy whereby the investor attempts to predict market direction or trends and then time their transactions to effect a profit.

In certain employer-sponsored retirement plans, the employer is permitted to match the employee's contribution to the plan up to certain limits.

The date on which the principal amount of a debt instrument, such as a note or bond, or an annuity contract becomes due and payable.

While there is no hard and fast rule, it is a company with a market capitalization generally between $1 billion and $5 billion. Also known as mid cap.

While there is no hard and fast rule, it is a company with a market capitalization less than $250 million.

While there is no hard and fast rule, it is a company with a market capitalization generally between $1 billion and $5 billion. Also known as medium cap.

In an IRA, the IRS requires that the owner begin taking minimum annual payments at the owner's age of 70 1/2. If the minimum payment amount is not taken, there are IRS income tax penalties due on the amount that should have been taken from the account. Also known as the Required Minimum Distribution or RMD.

A mutual fund that invests in short-term securities such as negotiable certificates of deposit, commercial paper and U.S. Treasury Bills. Money market funds generally expose the investor to the least amount of market risk and also tend to provide the smallest returns. Shares of the fund are not insured or guaranteed the Federal Deposit Insurance Corporation or any other government agency.

Debt securities, typically with a maturity date of one year or less. A money market fund invests in these securities.

An employer sponsored retirement plan where the employer contributes to the plan on behalf of the employee. The amount contributed is a percentage of the employee's salary and under this type of plan, annual contributions to the plan are mandatory.

A loan used to purchase real estate. The interest rate charged on a mortgage may be fixed or variable, and the property is used as collateral for the loan.

Securities whose payments to the investor are based on payments of principal and interest of an underlying pool of mortgages.

Insurance that protects a lender from a mortgage-holder's default. Mortgage insurance is commonly required by the lender when the borrower puts down less than 20% of the purchase price as a deposit.

A federal income tax deduction permitted for interest paid on a mortgage used for purchase, construction or remodeling a home.

A life insurance policy purchased for the express purpose of paying the balance of a mortgage loan if the borrower dies before the loan is paid.

Debt instruments issued by states, counties, cities, to fund projects such as roads and bridge construction. The interest paid on muni bonds is typically exempt from federal income tax.

An open-ended investment company that invests money received from shareholders into portfolios of securities selected and managed to achieve certain stated investment objectives. Investors own a proportionate share of the overall portfolio in the form of mutual fund shares. The value of those shares fluctuates with the value of the underlying securities in the portfolio. The share price of the fund is determined daily and is known as net asset value.

Abbreviation for the National Association of Securities Dealers. The NASD is a securities industry self-regulatory agency charged with regulating the NASDAQ and over-the-counter securities markets. The NASD also establishes the testing requirements and administers the registration of individuals who want to sell different types of securities to the public.

The share price of mutual fund shares calculated once a day and determined by adding up the value of all the securities within the mutual fund portfolio and then dividing that value by the number of outstanding mutual fund shares.

An individual's financial worth calculated by taking all of their assets and subtracting all of their liabilities.

Term used in reference to mutual funds that do not charge a separate sales charge to purchase or sell shares in the fund.

The percentage return on a fixed-income security, such as a bond. It is calculated by taking the amount of income earned divided by the face value, or par value of the security.

An employer-sponsored retirement plan where all contributions to the plan are made solely by the employer.

Contribution made to a qualified retirement plan or IRA that is not eligible for deduction from the contributor's income taxes for that year.

The risk associated with an entire class of assets or industry sector. This type of investment risk can sometimes be mitigated through asset allocation or diversification since different asset classes and industries will commonly respond differently under the same market and economic conditions.

A retirement plan that does not meet IRS rules for deductibility or favorable tax treatment of contributions or withdrawals.

In life insurance, it is a contract that cannot be renewed, or may require that the insured go through additional medical underwriting in order to renew the policy.

The age defined in a retirement plan when full retirement benefits can be received by the employee. Early retirement from most plans usually results in a reduction of benefits.

A mutual fund that continually accepts new investors by issuing new shares in the fund and redeems shares of those investors interesting in liquidating their investment.

An investment company formed to issue, manage and administer open-ended mutual funds.

In reference to a security, it is one not traded on an exchange; broker/dealers trade these securities directly over the phone and computer.

Usually used in reference to an annuity or life insurance contract, it refers to the partial liquidation of the cash or surrender value of the asset.

An investor who does not play an active role in the management of his/her investments or business interests.

An investment management strategy where the portfolio is structured to attempt to mimic the performance of a certain benchmark or index. Portfolio managers effect trades only when necessary to keep the portfolio on track, but not as part of an active management strategy.

An agreement between you and your employer under which your employer contributes a certain amount of money to a retirement plan during the years you work. Pension plans fall under two main categories: A defined benefit plan, which guarantees you will receive a fixed, pre-determined amount upon retirement, and a defined contribution plan, which does not guarantee a fixed pension amount.

A federal corporation created under ERISA to insure vested benefits of pension plan participants. Also referred to as PBGC.

The owner of a life insurance policy. Although not required, the policyholder is also commonly the insured on the contract.

A loan taken by a policy holder against the available cash value of a life insurance contract.

The cancellation or liquidation of a life insurance or annuity contract. Any available cash, also called surrender value, is paid out at time of surrender.

The investment risk associated with making investments in overseas companies or securities. Changes in the political climate of the foreign country of origin can negatively impact the value of that investment, independent of other market or economic conditions.

A collection of assets or investments, commonly assembled to meet a certain investment objective or financial goal.

Equity ownership in a corporation that is given preferential treatment over common stock in terms of dividend payments and payout in the event of liquidation of the company. When dividends are declared, preferred stock pays a fixed dividend amount stated as a percentage. While preferred stock receives preferential treatment with regards to payment, generally it does not provide any voting rights as does common stock.

A fee or penalty charged for paying back the principal of a loan or mortgage ahead of schedule.

The current worth of an amount or series of amounts payable or receivable in the future after discounting each such amount at a specified rate of interest (the discount rate).

A stock's market price divided by its current or estimated future earnings. It is a measure of the attractiveness of a particular security versus all other securities as determined by the investing public. The P/E ratio gives investors an idea of how much they are paying for earning power.

The amount invested or borrowed. It does not include earnings on the investment or interest paid on a loan.

A legal document required when purchasing securities and mutual fund shares. It outlines details of the investment, the issuer, financial information and in the case of mutual funds, the investment objective and investment policy of the fund. It is required by law to assist investors in making informed decisions before they invest.

Used in conjunction with many types of fiduciary relationships such as retirement plan accounts or custodial accounts, it is the investment principal that suggests that the person or company responsible for the account should act in a manner consistent with that of a 'prudent man,' taking into account both the safety of capital along with the opportunity for income.

Also known as POP, and most commonly used in conjunction with mutual funds, it is the per share price at which the investment is made available to the public. In the case of mutual funds, it is the net asset value plus the sales charge.

The risk of loss of future purchasing power of your money due to inflation. Even the most risk-averse investor who prefers to keep all of his or her money in cash to keep it safe is subject to purchasing power risk over time.

An investment that qualifies for special income tax treatment as part of a qualified plan.

An employer-sponsored retirement plan designed to provide retirement benefits for employees that qualifies for special tax treatment under the Internal Revenue Code. These plans have been created to encourage employers to provide retirement benefits for employees, as well as encourage individuals to save for their own retirement.

In the case of a mortgage it is the lender's willingness to freeze or lock an interest rate for a certain period of time. This guarantee provides the borrower comfort in knowing the rate they'll pay on their mortgage won't go any higher while their mortgage is getting approved, however, it prevents them from taking advantage of a lower rate if interest rates fall.

The percentage change in the value of an investment in an asset (or portfolio of assets) over a specified time period. It may include interest, dividends or capital gains or losses.

Raw land and other forms of real property, such as apartments, office buildings, retail stores, and warehouses.

The gain or loss of an investment after inflation has been accounted for. If an investment returns 8% and inflation is 4%, your real return would be 4%.

In an investment portfolio, over time, gains and losses in the investments within the portfolio will change the mix of investments in the portfolio. For example, a portfolio that was originally 40% stocks, 40% bonds and 20% cash may now be 60% stocks, 30% bonds and 10% cash. Rebalancing is the process of making adjustments within an investment portfolio to bring that mix of investments back to within the original parameters. In the example used, adjustments would be made to restore the original 40/40/20 balance.

The payment of an existing loan with the proceeds from a new loan. Commonly done with mortgage loans, it may be financially beneficial to refinance a mortgage when interest rates have fallen. It may be possible to significantly lower your current monthly payment. Or you may be in a position to keep your monthly payment roughly the same, but lower the term of the loan, saving significant interest over the life of the loan. It is important to note that before making the decision to refinance, you should not only consider the potentially lower monthly payment or shortened life of the loan, but the fees and closing costs associated with obtaining the new loan.

An individual who registers with the SEC or state Securities Division to hold himself or herself out as an investment advisor or financial planner. This registration permits an individual to give advice, make recommendations, perform analysis and create reports and publications pertaining to securities investing. An individual may register as an RIA with permission from his or her broker/dealer. However, more commonly, the broker/dealer will secure a firm registration that will allow all registered representatives working in the firm, who meet specific requirements, to affiliate with the firm's RIA. Such persons may then hold themselves out as an Investment Adviser Representative.

An individual who has passed appropriate exams to sell securities to the public in the capacity of an agent. These individuals specifically have passed the Series 7 General Securities and have met state securities requirements and are currently employed by an NASD member broker/dealer.

The risk that there may be changes in laws pertinent to a certain industry or segment of the economy that may adversely impact investments in those impacted industries.

The risk that proceeds from an investment, such as interest, dividends or return of principal may not be able to be reinvested at the same rate of return as the original investment due to changes in the market.

In an IRA, the IRS requires that the owner begin taking minimum annual payments at the owner's age of 70 1/2. If the minimum payment amount is not taken, there are IRS income tax penalties due on the amount that should have been taken from the account. Also known as RMD.

A measure of profit or loss from an investment, usually expressed as a percentage.

A financial arrangement between a homeowner and a lender where the homeowner borrows against the equity of his/her home in exchange for a stream of regular monthly income payments. Typically set up as a means to fund a retirement income while allowing the homeowner to remain in the home, the property then reverts ownership to the lender at the end of the mortgage term or death of the homeowner.

A consumer's legal right to cancel or rescind a contract, such as a loan within three business days of signing the loan agreement, without risk of penalty or loss.

In investing, it is the likelihood of loss or poor returns.

The willingness and ability of an investor to accept the uncertainty regarding possible loss from an investment.

An IRA account typically set up to hold assets from another qualified retirement plan, such as a 401(k), when you change employers. The funds can stay in this rollover IRA indefinitely or you may again roll these funds into the 401(k) of your new employer if the new plan permits, and as long as the funds in the rollover IRA were not co-mingled with other IRA dollars.

A type of IRA account which allows investors to save for retirement using after-tax dollars, however, the money accumulates and can be withdrawn income tax-free, subject to certain rules. Roth IRAs may only be established by individuals within certain income limits and, similar to a traditional IRA, includes annual contribution limits as well.

A group of rules established by the NASD (National Association of Securities Dealers) designed to define grounds for proper ethical conduct and customer treatment by registered representatives.

A market value-weighted index consisting of the stock of the smallest 2,000 companies of the largest 3,000 U.S. companies by market capitalization. The index return includes the reinvestment of dividends and is considered to be representative of the performance of small companies.

A fee or commission charged for effecting a securities transaction. This charge is used to pay for the services of the agent or broker who assists you in effecting the trade. Sales charges may vary depending on the type of security and level of service you're interested in from the agent or broker.

A life insurance policy covering the lives of two individuals. The death benefit is payable upon the death of the last, or second, person to die. Commonly used as an estate planning tool by married couples, it is also known as survivorship life.

A college savings plan sponsored by individual states and administered by investment companies. Each state's 529 plan varies by contribution limit, deductibility of contributions, availability to non-residents, and investment choices. Proceeds from the plan may only be used for qualified educational expenses. Non-qualified withdrawals are income taxable and are also subject to a 10% penalty. The investment company administering the plan may charge a separate fee for the account.

A mutual fund that invests either predominantly or exclusively in a particular industry or sector of the economy, such as financial services, health care, or real estate. Sector funds are generally considered riskier than other more diversified funds.

The SIPC was created by Congress and provides insurance protection for investors with accounts in brokerage firms up to $500,000 ($100,000 cash) against bankruptcy of the firm. It is funded by premiums paid by member broker/dealers. It is important to note that the insurance protection afforded only protects the investor in the event the broker/dealer becomes insolvent, but does not protect the investor against any market or investment losses.

Under securities law, an investment made in a common enterprise with the reasonable expectation of deriving profits solely from the actions of others. Stocks, mutual funds, bonds, and variable annuities all are securities.

A personal retirement account typically set up through a brokerage firm where the investor makes his or her own investment decisions surrounding the securities in the portfolio, including stocks, bonds, mutual funds or other investments. These accounts typically have a annual fee and vary by broker/dealer.

An acronym for Simplified Employee Pension IRA, it is a retirement program for self-employed individuals and small business owners permitting the business to set up IRA accounts for the benefit of the owners and employees. SEP-IRAs typically have higher contribution limits than individually-owned traditional or Roth IRAs.

A professional registration secured by exam and administered by the National Association of Securities Dealers (NASD). A series 6 registration, called a limited registered representative, authorizes an individual to sell a limited number of types of securities, such as mutual funds to the public as long as that person is affiliated with a registered broker/dealer.

A professional registration secured by exam and administered by the National Association of Securities Dealers (NASD). A series 7 registration, called the general securities registration, authorizes an individual to sell general securities to the public as long as that person is affiliated with a registered broker/dealer. This includes individual stocks, bonds, mutual funds and other investment products.

A professional registration offered by exam through the National Association of Securities Dealers (NASD) that permits the holder to conduct securities business in multiple state. Also known as a Blue Sky Registration. Individual application and registration fees are generally required by each individual state in which a registered representative wishes to conduct business.

A portion of ownership in a corporation, or an investment company, such as a mutual fund.

A qualified retirement savings plan designed for employers with fewer than 100 employees. It is an acronym for Savings Incentive Match Plan for Employees. It may be structured similarly to a 401(k) or IRA, but is designed to reduce or eliminate some of the fees and administration required of similar plans for larger employers that can be cumbersome or too expensive for small employers.

An annuity contract for which payments are based on the mortality of just one individual. This is in contrast to a joint or joint and survivor annuity.

An annuity contract that is purchased using a lump sum or single premium and which is immediately converted, or annuitized, into some contractually permitted income stream.

A company with a market capitalization of lesser size is said to be a small cap company. Although not a hard and fast rule, a small cap company generally has between $250 million and $1 billion in market capitalization.

A market value-weighted index covering the stocks of 500 utility, industrial, transportation and financial companies. A very popular and commonly quoted index, it is considered to be representative of the performance of large capitalization companies of the US markets.

a measurement of relative risk in investing intended to show much the investment's short term return tends to deviate from its average return-in other words, how volatile it has been.

A share of ownership in a corporation. When you own stock, you usually have a right to vote on certain corporate matters, such as members of the Board of Directors. Because stocks represent ownership, they are also commonly referred to as equities.

A dividend payable in shares of stock and generally disbursed in lieu of cash by corporations wishing to conserve capital for expansion or other purposes.

A mutual fund that invests primarily in stocks of publicly traded companies. Any earnings in the fund come from a combination of dividends paid by the stocks in the portfolio, and the potential increase in value of the underlying stocks that make up the portfolio (capital appreciation).

A means of depositing funds in a financial product, investment account or plan whereby the investor makes regular payments at pre-determined intervals, such as monthly.

The risk associated with investing in a class of assets. Also known as market risk, asset allocation or diversification may help mitigate one's exposure to systematic risk, since different classes of assets react to different market conditions in different ways.

A means of withdrawing funds from a financial product or investment account whereby a requested amount is withdrawn and sent to the investor at pre-defined intervals, such as monthly or quarterly. The amount withdrawn may be a fixed, stated amount or simply all earnings in the account for the time period.

A general term used to identify an investment, financial product or plan that provides some income tax benefit. This may include something that is tax-free, tax-deferred, or tax-deductible.

An item or expense permitted by law to be subtracted from your gross or adjusted gross income, thereby reducing the amount of taxable income on which federal income taxes are applied.

Delaying the payment of income taxes until