ASSET ALLOCATION — A method by which a financial planner or investment advisor allocates the assets at a client’s disposal. The allocation reflects a client’s appetite for risk, current financial well-being, and market conditions.
BOND — A debt investment in which an investor loans money to an entity (typically corporate or governmental) that borrows the funds for a defined period of time at a variable or fixed interest rate.
DEDUCTIBLE IRA — An account in which contributions are made with pre-tax assets based on the ordinary income level of the individual. Earnings within the IRA have no tax impact until withdrawn at retirement and are then taxed as ordinary income.
ETF (Exchange Traded Fund) — A security similar to and closely related to the closed-end mutual fund. But unlike a mutual fund, a holder of an ETF share does not own a portion of the securities held by the ETF sponsor, but owns a portion of the creation unit held by institutions called authorized participants (APs). APs are major investment banks and brokerage houses, such as Blackrock. The APs create and redeem the ETFs through their buying and selling the underlying securities in exchange for the ETF share. This is what keeps ETF prices accurate and close to the index a fund is supposed to track.
INTEGRATED FINANCIAL SERVICES — Some companies offer investment management, wealth management, tax planning, or insurance. Integrated financial services companies such as ARGI offer all of those services, resulting in a seamless, all-inclusive financial strategy.
INVESTMENT ADVISER — An individual or a firm that is in the business of giving advice about securities.
IRA CONTRIBUTION LIMIT — In 2015 the maximum amount for earned income was $5,500, and for age 50 or over, $6,500.
NON-DEDUCTIBLE IRA — An account where contributions are allowed for those not qualifying for pre-tax assets. Earnings within the IRA have no tax impact until withdrawn at retirement, and are then taxed as ordinary income, except for those portions of the withdrawal corresponding to contributions that were not deducted.
RE-BALANCING — Portfolios construction often reflects the constituents of an index or an economy. Over time those constituents or that economy can change, so portfolios are periodically altered to address those changes.
REGISTERED INVESTMENT ADVISOR (RIA) — A firm registered with the Securities and Exchange Commission or a state’s securities agency.
ROTH IRA — An account where contributions are made with after-tax assets, all transactions within the IRA have no tax impact, and withdrawals are tax-free.
ROTH IRA CONTRIBUTION LIMIT — Check irs.gov for the maximum contribution amounts for earned income. Be sure to check with your tax advisor about your particular situation.
ROTH IRA CONTRIBUTION LIMIT BASED ON AGI — Contribution amount limited and varied for AGI under $181,000 for married filing jointly, and $129,000 for single filers.
SECURITY — A catch-all term for many kinds of intangible investments: stocks, bonds, mutual funds, etc. There are primarily two types of securities: equity securities (stocks) and debt securities (bonds).
STOCK — A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.