P1 Financial Terms Flashcards

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1040 Form

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The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns.

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401(k)

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A qualified retirement savings plan established by employers to which eligible employees may make salary deferral contributions on a post-tax and/or pretax basis. Earnings accrue on a tax-deferred basis and employers may or may not match a percentage of employee contributions.

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403 (b)

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A U.S. tax-advantaged retirement savings plan available for public education organizations, some non-profit employers such as schools, churches, and hospitals.

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50/30/20 Budget

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A spending plan that allocates 50% of your net income to needs, 30% to wants and 20% to savings (and/or debt repayment).

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Annual Fee

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A yearly fee that's charged by the credit card company for the convenience of having/using a credit card.

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Annual Percentage Rate (APR)

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The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.

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Asset

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Anything of value that is owned.

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Asset Allocation

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The process of creating an investment portfolio by distributing your money among several different types of investments based on your risk tolerance, short & long term financial goals, and time horizon.

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Automobile Insurance

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Insurance purchased for cars, trucks, and other road vehicles. Its primary use is to provide protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom.

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Bank

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A financial institution licensed as a receiver of deposits usually regulated by the national government of most countries. Typically there are two types: commercial/retail and investment.