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Glossary

What is an Asset Class?

An asset class is a group of investments that share similar characteristics and behavior, and are subject to the same laws and regulations. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents (money market...

What is Bad Debt?

Bad debt is debt that typically carries a high interest rate and is incurred to purchase items that depreciate in value. Credit card debt and auto loans are the most common forms of "bad debt."   See Also: How I Ditched My Debt For Good Is Your...

What is a Benchmark?

A benchmark is a standard against which the performance of a particular investment, portfolio or money manager can be measured for comparison. Typically, broad stock and bond indexes are used for this purpose.   See Also:  Ask An Advisor: Am I...

What is a Beneficiary?

A beneficiary is a person or place designated to receive distributions typically from a trust, will or life insurance policy.   See Also: Ask An Advisor: How Much Life Insurance Do I Need? Got Competing Financial Priorities? Your Fall Investing...

What is a Bond?

A bond is a debt investment in which an investor loans money to a corporation, government or municipality that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used to finance a variety of projects and activities....

What is a Budget?

A budget is an estimate of income and expenses for a specific period of time in the future that can be used for personal, business or other purposes. Ideally, you have a "surplus" budget with extra income after all expenses and not a "deficit"...

What is a Certificate of Deposit (CD)?

A Certificate of Deposit (CD) is a promissary note generally issued by commercial banks that has a maturity date, fixed interest rate and is insured by the FDIC. In most cases there is a penalty for withdrawing your investment prior to the...

What is a Checking Account?

A checking account is a highly liquid, transactional account held at a financial institution that allows you to make withdrawals and deposits on demand. Because of the high liquidity, checking accounts generally pay a very low rate of interest, if...

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