10 Financial Terms and Definitions That Everyone Should Be Familiar With

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

As a team of professional financial planners that works with clients each and every day, we know that there are a lot of industry terms that people aren't familiar with. Even terms that you hear often such as "stocks" and "bonds," we also know that getting their definitions down can be tricky.

Today, we want to change that. Keep reading for some simple definitions to financial terms that we think everyone should know!

Asset: An asset is anything that you own that has monetary value.

Bond: Bonds are evidence of debt where the issuer promises to pay the bondholders a specific amount of interest, as well as repay the principal at maturity. Most of the time, bonds will be issued in multiples of $1,000.

Cash alternatives: Cash alternatives are short-term investments, such as certificates of deposit, money market fund shares and U.S. Treasury securities, that can be converted into cash quickly.

Compound interest: Compound interest refers to interest that is computed on both the principal and the accrued interest. It can be computed either continuously, daily, monthly, quarterly, semiannual or annually.

Inflation: Inflation is the increase in price of a product and/or service over time. To measure inflation, the government uses the Consumer Price Index.

Liquidity: Liquidity is how easily or quickly a particular asset or security can be turned into cash.

Portfolio: Portfolios are all of the investments that an individual or a mutual fund holds.

Security: Securities are evidence of an investment that are either in direct ownership, indirect ownership or creditorship.

Tax deferred: When something is tax deferred (such as interest, dividends or capital gains) it means that it grows untaxed in a certain account or plan until it is withdrawn.

Volatility: Volatility is the range of price swings seen in a security or market over time.

Know of other terms that you'd like the definition for? We likely have them in our glossary! Just head on over to our website and scroll down or search by letter/word to find what you're looking for.

American Investment Planners LLC offers tax planning, estate planning, retirement planning and more to generations of families throughout the United States. More information about the services offered is available by calling (516) 932-5130 or emailing info@americaninvestmentplanners.com.