Ever wonder what the difference is between an APR and an IRA? Or maybe you’re confused about the difference between stocks and bonds, or you’re uncertain about mutual funds and ETFs.

We know that when you start planning your financial life, you can sometimes encounter words and phrases that might seem confusing.

That’s why we’ve put together a glossary of some of the most common financial terms you’re likely to encounter. So if you’re mixing up credit limits and credit scores, we’ve got you covered with dozens of definitions of important terms that can help you become more knowledgeable about money and investing.

Stash wants to be your resource for financial planning and information, so check it out. We’ll keep adding to the glossary over the coming months.

An employer-sponsored retirement plan that lets you put money away on a pre-tax basis.

52-Week Range
The highest and lowest price at which a stock has traded over the course of the previous year.

Annual percentage rate; it’s how much interest you pay on your loans each year.

Asset Allocation
The allotment of investments in your portfolio into different asset classes. These classes can include stocks, bonds, cash, mutual funds, exchange-traded funds (ETFs), and more.

An amount owed, typically on a loan or for a purchase or service.

A bond is a kind of debt. You can think of it as an IOU from a company, city, or the federal government. Bond issuers promise to pay you back in full according to a specific schedule, with regular interest payments.

An estimate of your income and expenses for the month or year used to plan your financial life.

The return earned on your principal, plus any past earnings and returns.

Credit Limit
The maximum amount you can borrow on a particular credit card.

Credit Report
A credit file created by a credit agency that contains information about your loan and credit account history.

Credit Score
A  three-number score that assesses how responsible you are with loans and debt over time.

A person or financial institution that lends you money.

Money contractually owed by one party to another. In investing, governments and companies borrow money by issuing debt in the form of bonds, notes, and mortgages. Investors buy the debt in exchange for repayment, plus interest.

Discretionary Income
Money left over after you’ve paid your monthly essentials, such as rent or mortgage, student loans, and utilities.

Spreading out risk by putting money into a variety of different investments that are not subject to the same risks, such as stocks, bonds, ETFs, mutual funds, cash, and commodities.

A payout from a company to its shareholders representing a portion of the company’s profits. Dividends represent a per-share return on an investment, and are typically distributed as cash on a quarterly or annual basis.

Dividend Yield
A mathematical formula that measures a company’s annual dividend payment compared to its share price.

Dollar-Cost Averaging
Investing a fixed dollar amount in an investment, or investments, on a regular schedule over time.

Earnings per Share (EPS)
A mathematical formula that calculates profit by dividing it among each share of common stock outstanding.

Investor ownership of a company, represented by stock, or shares, owned.

Exchange Traded Fund (ETF)
A basket of investments, bundled into a single fund, that trades on an exchange similar to the way stocks do.

Expense Ratio
A percentage of your total investment in a fund that’s used to cover operational expenses of the fund.

The total amount of money invested in any one kind of investment, representing the amount of money an investor could lose in the market.

FAANG Stocks
An acronym for five tech stocks that have historically performed well compared to the rest of the market. Those stocks are Facebook, Amazon, Apple, Netflix, and Google.

A person, financial institution, or brokerage ethically and legally bound to act in the best interest of a person whose assets they manage.

Financial Literacy
The ability to assess your own financial situation, so you can make smart decisions about money regularly.

Fixed Expenses
Ongoing costs you have to pay each month. Examples include your rent or mortgage, student loans, health insurance premiums, and car payments.

Gross Pay
The amount you get paid prior to taxes being taken out of your paycheck.

Impulse Spending
An unplanned decision to buy something on the spot.

A group of securities whose price performance is used to gauge the ups and downs of a market, or a segment of the market.

Interest Rate
The percentage rate that ‘s charged on an unpaid loan balance. It can also be called an APR, or annual rate of interest.

Individual Retirement Account (IRA)
A retirement account funded with pre-tax income that lets your earnings grown on a tax-deferred basis.

Lifestyle Creep
The tendency to spend more as you earn more, particularly on non-essential items.

How quickly a financial asset can be converted into cash. The more “liquid” an asset, the faster it can be sold, without affecting its price.

Lock Up Period
An agreement that prohibits company insiders from selling their shares for a specified period of time following an IPO.

Long-Term Savings
Savings in an investment or high-yield savings for bigger goals such as retirement, or buying a house.

Market Capitalization
The equity value of a company, defined as the total dollar value of its outstanding shares in the market.

A loan from a financial institution that allows you to buy a house or some other property if you don’t have all the cash necessary to do so.

Net Pay
The amount left over in your paycheck after state and federal taxes have been taken out, as well as deductions for things like Medicare and Social Security.

Net Worth
Your assets, or what you own, minus liabilities, or what you owe.

P/E Ratio
A mathematical formula that measures a company’s stock price compared to its earnings per share.

Passive Income
Income generated without active participation, such as from rent, stock earnings or dividends, and royalties.

Pay Gap
The difference between what men and women earn for doing the same work. Women tend to earn less.

The combined investments you hold such as stocks, bonds, and cash. A portfolio can help you diversify and reduce risk.

Power of Attorney
A legal document that authorizes one person to take over for another person if that person is unable to perform daily decision-making functions, often related to money and property, due to old age or mental incapacity.

Principal is the original amount that you borrowed on your loan. It’s different from interest, which is a percentage charged annually and added to the principal.


An investment strategy that attempts to bring a portfolio back to its target allocation by buying or selling stocks, bonds, or funds.

Return is either a gain or loss on an investment, such as a stock, bond, fund, or an entire portfolio. It can be calculated as both a dollar amount or percentage.

The potential for an investment to lose value or money. More risk can mean greater potential gains, but it can also mean a greater chance of losing money.

Risk level
The likelihood a particular investment could lose money, based on historical performance. Conservative, Moderate, or Aggressive are three labels typically used to describe risk in ascending order.

Roth IRA
A retirement account that lets you contribute money after taxes, allowing earnings to grow tax free.

Security Deposit
Money a renter is required to put down prior to moving in, that protects a landlord against property damage, or if the tenant is unable to pay rent.

Set Schedule
Set Schedule is one of our Auto-Stash strategies to help you automatically save. It lets you easily build a schedule to save and invest a set amount on a weekly, biweekly, or monthly basis.

Short-Term Savings
Money set aside for upcoming expenses, such as vacations or holiday gifts, that you keep in an easily accessible account.

A unit, or percentage, of ownership of a company

Letters used to identify a security on an exchange, for trading purposes.

Top fund holdings
The top investments by percentage of any exchange-traded fund (ETF) or mutual fund. Typically the fund will highlight the top 10 holdings and their weighting in the fund by percentage.

Tracking Error
The difference between a portfolio’s performance, or return, and the benchmark or index it attempts to track.

Traditional IRA
A retirement savings account that lets you put money away on a pre-tax basis. IRA stands for Individual Retirement Account.

Variable Expenses
Flexible monthly costs. These can include food, clothing, meals out, and entertainment. You can always reduce what you pay for variable costs if you need to spend more in other parts of your budget.

The tendency for the returns of stocks, bonds, and markets to fluctuate up and down. It’s a measure of how risky investments could be, and a normal part of investing.

YTD change
The performance of an investment from the beginning of the calendar year up to the most recent trading day.