Finanzlexikon

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401(k)

A US employer-sponsored retirement plan funded with pre-tax salary, often with a match.

50/30/20 Rule

A budgeting guide that splits after-tax income into 50% needs, 30% wants and 20% savings.

A

Amortization

Paying off a loan through regular payments split between interest and principal, with interest taking the larger share early on.

Annual Income

Total earnings over a year, quoted either before tax (gross) or after tax (net).

Annual Percentage Rate (APR)

The yearly cost of borrowing, including interest and certain fees, expressed as a percentage.

Annual Percentage Yield (APY)

The yearly return on savings including the effect of compounding, expressed as a percentage.

Annuity

A financial product or stream of equal payments made at regular intervals, often used for retirement income.

Appreciation

An increase in the value of an asset over time, the opposite of depreciation.

Asset

Anything you own that has monetary value, such as cash, property or investments.

Asset Allocation

How a portfolio is divided among asset types like stocks, bonds and cash to balance risk and return.

B

Balance Transfer

Moving debt from one credit card to another, often to secure a lower interest rate for a period.

Balloon Payment

A large one-time payment due at the end of certain loans after smaller regular payments.

Bear Market

A prolonged period of falling asset prices, often defined as a drop of 20% or more.

Bond

A loan you make to a government or company that pays interest and returns the principal at maturity.

Budget

A plan that tracks expected income and expenses over a period so spending stays intentional.

Bull Market

A prolonged period of rising asset prices and general investor optimism.

C

CAGR (Compound Annual Growth Rate)

The smoothed average annual growth rate of an investment over multiple years.

Capital

Money or assets used to generate income or to fund a business or investment.

Capital Gain

The profit made when you sell an asset for more than you paid for it.

Cash Flow

The money moving in and out of a household or business over a period of time.

Cash Reserve

Liquid funds kept on hand to cover short-term needs without selling investments.

Closing Costs

Fees paid to finalize a real estate purchase, on top of the down payment.

Collateral

An asset pledged to secure a loan that the lender can claim if you default.

Compound Interest

Interest calculated on both the original principal and the interest already earned.

Compounding Frequency

How often interest is added to a balance, such as monthly, quarterly or yearly.

Consolidation

Combining several debts into a single loan, often to simplify payments or lower the rate.

Cosigner

A person who agrees to repay a loan if the primary borrower cannot.

Coupon Rate

The annual interest a bond pays, expressed as a percentage of its face value.

Credit Score

A number summarizing your creditworthiness that lenders use to assess risk.

Credit Utilization

The share of your available credit you are currently using; lower is generally better.

D

Debt Avalanche

A payoff strategy that targets the highest-interest debt first to minimize total interest.

Debt Snowball

A payoff strategy that clears the smallest balances first for motivation and momentum.

Debt-to-Income Ratio (DTI)

Your monthly debt payments divided by your gross monthly income, shown as a percentage.

Deduction

An expense subtracted from taxable income to reduce the tax you owe.

Default

Failing to repay a debt according to its agreed terms.

Deferment

A temporary, approved pause on loan payments, common with student loans.

Depreciation

A decrease in the value of an asset over time through use, age or wear.

Discount Rate

The rate used to convert future cash flows into their value today.

Diversification

Spreading investments across many assets so no single loss is decisive.

Dividend

A share of a company's profits paid out to its shareholders.

Dividend Yield

A company's annual dividend divided by its share price, expressed as a percentage.

Down Payment

The upfront cash portion of a purchase price, such as on a home or car.

E

Emergency Fund

Savings set aside to cover unexpected expenses or a loss of income, typically 3–6 months of costs.

Equity

The value of an asset you truly own after subtracting any debt held against it.

Escrow

An account a lender uses to hold and pay your property taxes and insurance.

ETF (Exchange-Traded Fund)

A basket of securities that trades on an exchange throughout the day like a stock.

Expense Ratio

The annual fee a fund charges, expressed as a percentage of the money invested.

F

Face Value

The amount a bond repays at maturity, also called par value.

Fixed Rate

An interest rate that stays the same for the life of a loan or deposit.

Future Value

What a sum of money today will be worth later after earning interest.

G

Grace Period

A set window after a due date during which no interest or penalty is charged.

Gross Income

Total income before taxes and deductions are taken out.

Gross Margin

Revenue minus the cost of goods sold, expressed as a percentage of revenue.

I

Inflation

The rate at which prices rise and the purchasing power of money falls over time.

Interest

The cost of borrowing money, or the return earned for lending or saving it.

Interest Rate

The percentage charged on a loan or paid on savings for each period.

IRA (Individual Retirement Account)

A tax-advantaged account for retirement saving in the United States.

L

Liability

A financial obligation or debt that you owe to someone else.

Lien

A lender's legal claim on an asset until the related debt is repaid.

Liquidity

How quickly an asset can be turned into cash without losing much value.

Loan-to-Value (LTV)

The loan amount divided by the value of the asset securing it, shown as a percentage.

M

Margin

The difference between the cost of a product and its selling price.

Market Capitalization

The total market value of a company's shares: price multiplied by shares outstanding.

Markup

The amount added to a product's cost to arrive at its selling price.

Maturity

The date when a bond or loan term ends and the principal becomes due.

Minimum Payment

The smallest amount you must pay on a debt to keep the account in good standing.

Mortgage

A loan used to buy property that is secured by the property itself.

Mutual Fund

A professionally managed investment that pools money from many investors.

N

Net Income

Income that remains after taxes and deductions; effectively your take-home pay.

Net Margin

Profit after all expenses, expressed as a percentage of revenue.

Net Worth

The total value of everything you own minus everything you owe.

O

Opportunity Cost

The value of the next-best alternative you give up when you make a choice.

Overdraft

Spending more than your account balance, which usually triggers a fee.

P

P/E Ratio

A share price divided by earnings per share, used to gauge how a stock is valued.

Pension

A retirement plan that pays regular income, often funded by an employer.

PMI (Private Mortgage Insurance)

Insurance lenders require when a home down payment is below 20%.

Present Value

What a future sum of money is worth today once discounted by a rate.

Principal

The original amount borrowed or invested, before interest is added.

R

Recurring Deposit

A savings plan with fixed deposits made every month over a set term.

Refinancing

Replacing an existing loan with a new one, usually to get better terms.

Return on Investment (ROI)

The gain or loss on an investment measured relative to its cost.

Risk Tolerance

How much investment ups and downs you are willing and able to accept.

Roth IRA

A US retirement account funded with after-tax money that can grow and be withdrawn tax-free.

S

Sales Tax

A tax added to the price of goods and services at the point of purchase.

Secured Loan

A loan backed by collateral, such as a mortgage or an auto loan.

Simple Interest

Interest calculated only on the original principal, not on interest already earned.

Sinking Fund

Money set aside regularly to cover a specific known future expense.

Standard Deduction

A fixed amount you can subtract from income instead of itemizing deductions.

Stock

A unit of ownership in a company, also called a share.

T

Take-Home Pay

The income you actually receive after taxes and deductions are removed.

Tax Bracket

A range of income that is taxed at a particular rate.

Term

The length of time over which a loan is repaid or a deposit is held.

Time Value of Money

The principle that a sum today is worth more than the same sum in the future.

U

Unsecured Loan

A loan not backed by collateral, such as most personal loans and credit cards.

V

Variable Rate

An interest rate that can change over time as a benchmark rate moves.

VAT (Value-Added Tax)

A consumption tax added at each stage of production and sale of goods and services.

Vesting

Gradually earning the right to employer-contributed funds over a period of service.

Volatility

How much an asset's price moves up and down over a given period.

W

Withholding

Tax an employer deducts from your paycheck and sends to the government on your behalf.

Y

Yield

The income earned on an investment, expressed as a percentage of its price.

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