American Investment Planners LLC
500 North Broadway, Suite 260, Jericho, NY 11753
(516) 932-5130 / (866) 932-5130
Since your financial standing follows you everywhere you go in this life as well as after you pass, it is crucial for you to be well aware of what different policies, procedures and other general financial topics mean. However, if you are not familiar with certain industry terms - and some of the simplest terms at that - understanding such topics would be quite the challenge.
As you think back to certain situations that involved your finances, such as filing your taxes, did you find yourself sitting in a state of confusion while your financial expert breezed through important documents? To help clarify some of the confusion that stems from financial topics, we put together 10 important terms along with their definitions below:
Asset - An asset is anything you own that has some degree of monetary value.
Beneficiary - Your beneficiary is the person, company or organization listed in agreements such as your life insurance policy, will or trust who will reap a financial benefit after your passing.
Bond - Bonds are evidence of debt where the issuer agrees to pay the bondholder a predetermined amount of interest as well as the principal at maturity.
Dividend - Dividends are pro rata portions of earnings typically distributed in cash by a corporation to its stockholders. When it is preferred stock, dividends are usually fixed. On the other hand, for common shares, dividends may vary along with the fortunes of the company.
Mutual Fund - A mutual fund is a collection of stocks, bonds or similar securities that are purchased and managed by a particular investment company using funds from a group o f investors.
Portfolio - A portfolio is a collection of all of the investments held by an individual or mutual fund.
Principal - With regards to securities, the principal is the sum of money that is invested, excluding earnings. For something such as a bond, the principal is the face amount.
Risk - Your risk is essentially your chance of loosing all or part of an investment.
Security - Security is your evidence of an investment in direct ownership, creditorship, or indirect ownership.
401(k) - 401(k)s are defined contribution plans that a company establishes for their employees to help them prepare for retirement.
Although the list of financial terms doesn't stop there, by knowing these basic ideas, you will be one step ahead of the game when it is time to discuss your finances with an employer, accountant, financial planner and so on. Should you have additional questions about terms and topics you have heard time and time again but are not familiar with, visit us on our website to check out our glossary!
As one of the largest and most respected independent financial planning firms in the country, we at American Investment Planners LLC strive to make sure that each and every one of our clients are well educated on the topics we assist them with. Throughout the process of planning and strategizing for a successful financial future, we make sure that our clients know what they are getting into every step of the way. For more information on the financial planning services we offer, please visit us at www.
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