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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 401(k) A qualified plan in which employees can contribute pre-tax, up to 15% of their gross income (up to approx.$11,000), which is then invested in stocks, bonds or money market instruments. Some employers match a portion of the employee's contribution. 403(b) A qualified plan in which employees of public schools and certain tax-exempt or non-profit organizations can contribute pre-tax, up to 15% of their gross income (up to approx.$11,000), which is then invested in stocks, bonds or money market instruments. Some employers match a portion of the employee's contribution. 404c Department of Labor Regulation requiring plan sponsors to provide adequate information and choices so plan participants can make informed decisions about their retirement plan. A AASim In each year of each lifetime, we generate a random rate of return based on an average and standard deviation that you specify. This captures the uncertainty related to the size of returns and the order in which they are experienced (i.e. do the high returns come when there's lots of money or little money). By applying these rates of returns to the anticipated cash flows of the account, AASim projects what might happen to an investor's portfolio.Accumulation Phase The early-to-middle years of the investment cycle. Attempt to accumulate assets to satisfy both long-term and short-term needs.Actual Dollars Report results presented in dollar values that are not discounted for the decreased spending value over time. For example, for an investor to have $100,000 of spending power 20 years from now it may take $200,000 of actual dollars just to equal the same spending value. (see Today's Dollars)Advisor (1) An advisor employed to provide advice on subjects related to investing and personal financial decisions. See also Financial Advisor. (2) A person employed to render advice or analysis about securities/investments for compensation, registered with the SEC under the Adviser's Act of 1940 or their respective state. Does not include attorneys and accountants who give advice as a part of their professional practice. See also Investment Advisor.Advisor Directory This tool enables Investors to search for Advisors on our site by providing basic information, plus whatever supplemental information the Advisor wishes to display.After Tax Amount of money available after deducting the effect of the applicable taxes.After Tax Retirement Income The amount of spending money needed, net after tax, to provide the investor with their desired lifestyle. Can be thought of as their annual budget in retirement or their total planned annual spending in retirement.Alpha This concept reflects investment returns in excess of the T-bill rate of return. It is a measure of the value added by portfolio managers through their investment style and analysis.American Depository Receipts (ADR) Certificates of ownership, issued by a U.S. bank representing some degree of indirect ownership in a foreign company.Annualized Return Also known as Compound Return, Geometric Mean and Time Weighted Return. It is the rate of return that when applied to a present value each year for the appropriate period of time that produces the anticipated future value at the end of the period. However, it is only an accurate predictor of future value when cash flows (deposits or withdrawals) are ignored.Annuity Investment product into which the investor contributes funds and then elects to receive payout in a fixed or variable amount, usually at retirement. Funds grow tax deferred.Arithmetic Mean The sum of the values divided by the number of values.Asset Everything of value owned, including cash, investments etc.Asset Allocation The blending of two or more assets in a portfolio which produce a better risk adjusted return than any of the individual assets would have produced on their own. (see Risk Adjusted Return)Asset Blend The decided mix of the individual's or mutual funds Portfolio, usually assets are divided among large-cap or small-cap stocks/foreign, bonds, or cash/t-bills.Asset Mix The decided mix of the individual's or mutual funds Portfolio, usually assets are divided among large-cap or small-cap stocks/foreign, bonds, or cash/t-bills.Assumption Risk The risk that the assumptions in a financial plan are either over or under stated, and will produce results not inline with those intended.B Benefit Administration The act of providing record keeping services for employee benefit plans like participant account statements and other reporting services.Benefit Plans Employer sponsored programs providing pensions, 401(k), health and welfare, and other defined contribution programs.Beta Measure of the sensitivity of a security or Portfolio relative to the overall market (Systematic Risk).Blended Tax Rate The rate when applied to total taxable income equals total tax obligation. Averages all tax brackets as applied to total income. Differs from marginal which is the rate the next dollar is taxed opposed to the average of all dollars.Bond A long-term contract in which the borrower agrees to make payments of interest and principle on specified dates to the holders.Brokerage Security transaction executed through a "brokerage firm" or "broker/dealer" in stocks, bonds, mutual funds, options or other investment securities.C Calculation Assumptions The fundamental math assumptions, or formulas used in a financial planning tool, such as annualized return, Monte Carlo simulations, etc.Capital Gains Tax The tax, either short-term or long-term, applied to the proceeds from a sale of a capital asset.Capital Gains/Loss The profit/loss from the sale of a capital asset. May be short term (12 months or less) or long term.Cash Flows Contributions and withdrawals to an account are referred to as Cash Flows.Certificate of Deposit (CD) Issued by institutions providing FDIC insurance requiring minimum deposits for specified periods of time.Choice Advisor To be a Choice Advisor, your clients must have an average chances of success of more than 50% for all of their plans evaluated over the last 90 days (at least three client plans must have been evaluated in that period). The 90 days allows the system to track whether the Advisor is improving their clients' chances for success. From the date you entered the third successful plan, you will become a Choice Advisor.Comfort Zone The Comfort Zone is where a client's investment strategy, goals and lifestyle are balanced at a level of success that is neither uncertain nor reflective of undue sacrifice on the part of the client. The Comfort Zone is the core of the Wealthcare process.Commission Brokers Employees of a member firm, who buy or sell investments for the customers of a firm.Common Stock Equity investment representing some degree of ownership in company.Compound Return Also known as Annualized Return, Geometric Mean and Time Weighted Return. It is the rate of return that when applied to a present value each year for the appropriate period of time that produces the anticipated future value at the end of the period. However, it is only an accurate predictor of future value when cash flows (deposits or withdrawals) are ignored.Contributions Money invested or put into an account.Convertible Bonds A bond with the added feature that bondholders have the option to exchange the bond for a set amount of common stock in the company.Correlation The degree to which two or more investments perform in tandem together in the market.Correlation Coefficient Standardized measure of the relationship between two series.Cost Basis Cost basis is that portion of an asset's current value for which the owner has already paid. The difference between the current value and cost basis is the unrealized capital gain (or loss).Credit Risk The investor's risk of not receiving back the money or interest payments expected.D Default Inflation Rate Assumption Financial Plans need an inflation assumption to more accurately reflect the spending needs and amount of money needed to meet the planned obligations. Most financial planning tools assume that all obligations inflate at the same rate using one inflation assumption. Our tool can do the same thing by inputting on the Personal Information page the assumed inflation rate in the Default Inflation Rate. Then, throughout the plan input screens, whenever you are asked for an inflation assumption simply select the default rate. It will automatically be tied to the rate you originally entered on the Personal Information Page. However, many investors want to presume differing rates of inflation for differing types of obligations or resources. For example, they may wish to assume a higher rate of inflation for educational costs or a lesser rate for pensions or social security benefits. Our tool automatically defaults to the Default Inflation Rate unless you enter a different rate for a specific cash flow or obligation. (See Global Rate)Deferred Annuity An Annuity where the annuitant allows earnings received into the account during the accumulation phase to accrue tax deferred until a later date.Deficit Amount of money that is below what is needed.Diversification Investment in several differing securities in the hope of spreading risk and thus reducing the inherent risks in investing.Dividends Distribution of a company's earnings to shareholders. Declared by the board of directors.E Estate Taxes Federal transfer tax brackets and rates which apply to the estate after the death of the holder. Currently estates are taxed on any amount in excess of $1,000,000. Often portfolios are managed or various estate planning techniques are employed to reduce this substantial tax burden.Effective Tax Rate The rate when applied to total taxable income equals total tax obligation. Averages all tax brackets as applied to total income. Differs from the marginal rate which is the rate at which the next dollar is taxed opposed to the average of all dollars.F Fees Money paid to investment advisors or money managers which reduces the expected total return of the individual's Portfolio.Fiduciary A person who supervises the investment Portfolio of a third party and is charged with making investment decisions in line with the owner's stated objectives. Also may be the personal representative of a deceased, the trustee of a trust, or any other person in a position of legal responsibility and trust.Financial Advisor An Advisor employed to provide advice on subjects related to investing and personal financial decisions.Financial Plan A plan with stated goals and objectives pertaining to current and long-term investment needs of the individual.Financial Planning Creating a plan with stated goals and objectives pertaining to the current and long-term investment needs of the individual.Financial Risk The risk that the company invested in will not do well, and the stock price will reflect the disappointing results.Fixed Annuity Insurance product that provides lifetime retirement income in previously designated monthly installments.Fixed Income Investments Generally a preferred stock or debt security (bonds) with an assigned percentage or dollar income return.G Geometric Mean Also known as the Annualized Return or Compound Return. See Compound Return.Gift Tax This tax applies to any gift of cash, securities, or other assets over $11,000 per year, per recipient.Gifting Stock Towards the end of the investment cycle, where excess funds are generally used to establish trusts, minimize estate taxes, etc.Growth Stock Stock generally thought to generate a higher rate of return than other stocks with similar risk associated with them due to things such as development of new products, additional markets etc.H High Yield Bond Bond rated below investment grade by ratings agencies, also called junk bond.Historical Audit Tool which illustrates how your plan would have performed in history.Historical Performance How an investor's financial plan would have performed if applied to the actual market returns on a historical basis in all market periods from 1926 to now.Historical Returns Returns of market indices throughout history. They can be either a compound return for a long period of time which is useful in measuring values presuming there are no contributions or withdrawals or they can be individual year by year returns which is necessary if there were contributions or withdrawals.I Individual Retirement Account (IRA) In 2002-2004, individuals may contribute the lower of $3,000 or 100% of their earned income annually to these tax-deferred accounts, and these contributions may be tax deductible. Note that individuals over age 50 may contribute up to $3,500 in 2002-2004.Inflation Assumptions for adjusting savings or retirement distributions based on estimated salary increases or cost-of-living adjustments.Interest Rate Risk Risk that if interest rates changed, securities bought for the fixed income feature, (such as bonds and preferred stock) will move in the opposite direction.Investment A current commitment of money for a period of time, to obtain future payments or wealth to compensate the investor for the time the funds were committed, inflation and uncertainty of repayment.Investment Advisor A person employed to render advice or analysis about securities/investments for compensation, registered with the SEC under the Adviser's Act of 1940 or their respective state. Does not include attorneys and accountants who give advice as a part of their professional practice.Investment Expenses The net cost of investing assets. Includes investment manager fees, 12b-1 fees, brokerage commissions and other investment expenses. Usually expressed as a annual percentage of total investment assets so that a 2.2% investment expense would reduce a gross investment return from 10.0% to 7.8%.Investment Horizon Period of time used in planning and forecasting when the investor will require the invested funds.K Keogh Plan Tax saving retirement program for self-employed people and their employees.L Large-Cap Stock Stock (ownership) in a company that has a total market value of all of their stock (market capitalization) which is larger than most. Usually considered several billion dollars.Length of Plan The investor's life expectancy, or how long they plan for their retirement assets to last.Liquidity The ease with which investors can convert their securities into cash, or vice-versa.Long-Term Capital Gain If the holding period for the investment is over 12 months, the capital gain is taxable at a lower long term capital gains tax rate.M Management Fee Compensation paid to an investment management company, average annual fee typically about 0.5% to 1.5% of fund assets.Marginal Tax Rate The tax rate upon which the next dollar of earnings will be taxed.Market Risk The uncertainty that a particular security's price may fluctuate solely due to investors' sentiment in the market, also called Systematic Risk.Mean Return The simple average of the returns. The sum of the returns divided by the number of returns.Modern Portfolio Theory (MPT) A theory of investing that presumes that investors are risk averse and to the extent they assume risk as measured by standard deviation they expect annualized returns over the risk free rate of return.Money Market Portfolios of high-quality, short-term securities. High liquidity and superior returns, an alternative to bank savings accounts.Monte Carlo The statistical generation of random possible returns for any given time period based on a statistically assumed distribution of returns.Mutual Funds Investment company that pools money from shareholders and invests in a variety of stocks, bonds and money market securities.N Net Asset Value (NAV) Market value of an investments company's assets after deducting liabilities and dividing by the number of shares outstanding.Net Worth The amount by which a person's total assets exceeds total liabilities.No-Load Fund Mutual fund that sells shares at net asset value without adding sales charges.O Option Contract Agreement grants the owner the right, not the obligation, to a future transaction regarding the security, at a fixed price.P Pension Plans Plans for employees of some corporations or government entity where the employer is obligated to provide either annual contributions or an annual benefit to the participant at retirement.Percentile Rankings The % Rankings Screen in the results report allows you to see the majority of the actual results of the back-testing of the different rolling periods. This screen was designed to give you an idea of the periods in which the plan actually would have achieved the goal or value at plan end.Performance Investment results measured in percentage returns. If there are no contributions or withdrawals annualized or compound returns may be used to measure the dollar amount of investment return. If there are contributions or withdrawals, the dollar amount of investment return is dependent on the individual returns year by year as applied to the value of the Portfolio each year as impacted by contributions or withdrawals.Planned Annual Savings All annual savings, including employer contributions.Planning The act of contemplating objectives, desires and variables to accomplish an objective. Example would be current investments, rates of returns and retirement income desired for an individual's financial plan.Portfolio A group of securities held by an investor, may include stocks, bonds, preferred stock, cash, etc.Portfolio Optimization The attempt to blend assets to achieve a compound return that is more efficient (either higher return for the assumed risk or lower risk for the assumed compound return). Since it is based on compound rates of return it is only accurate when applying it to Portfolios that have no contributions or withdrawals even if the exact assumptions are met.Preferred Stock Equity investment with a stated dividend payment.Price/Earnings Ratio (P/E) A company's stock price divided by earnings per share.Probability Analysis Probability analysis is the process of determining the odds that a plan will achieve certain goals instead of just calculating one, overly simplistic, ending value. In other words, instead of giving one possible scenario with one result, it generates many possible scenarios from which the probability of achieving a given result is determined. Because we can't see into the future, this is a much better method of financial planning.R Real Estate Investment Trust (REITS) Investments funds that hold Portfolios of real estate investments.Realized Capital Gains Taxable capital gains that have resulted from the sale of an appreciated asset.Reporting Plans These are plans that an Advisor has saved and protected from changes. You can make a copy of a Reporting Plan for viewing, but the original can not be altered. Plans can be moved to the reporting section by clicking the "Move to Reporting" button. To make a copy, click the "Copy" button next to the plan you would like to view.Retirement Period of time when one no longer actively works for compensation and lives based on the resources they have accumulated prior to retirement.Retirement Age The age at which the individual plan to stop working, and is generally when the contributions to tax deferred accounts stop and withdrawals from accounts begin.Retirement Income The amount of income needed, on an annual basis, to live once the investor has retired. Can be pretax (the amount needed for spending plus the taxes due on that amount) or after tax (the amount needed for spending to meet their lifestyle excluding taxes).Retirement Plan Either an individual's unique plan for meeting their retirement obligations OR an employer sponsored tax advantaged program to accumulate assets for retirement of the plan's participants. The act of planning to meet one's desired retirement financial objectives.Risk Uncertainty that an asset will earn its expected rate of return, and is generally measured using standard deviation.Risk Adjusted Return The return for each incremental degree of risk taken, often used in reference to measures of a portfolio's standard deviation.Risk Averse Assumption that if all else is equal, investors will choose the least risky alternative.Risk Management Making investment decisions to manage the general risk associated with the individual's methods of investing.Risk Premium The premium over the market's risk free rate that investors demand as compensation for an investment's uncertainty.Roth IRA Retirement account that allows certain individuals to take after tax money and invest it tax deferred until retirement and also distribute retirement income free of taxation.S Securities Any bond, note, stock, investment contract, etc.Sharpe Ratio The return per unit of standard deviation. Can be thought of as risk adjusted return.Short-Term Capital Gain If the holding period on an investment is 12 months or less - short term - any realized capital appreciation is taxable as ordinary income.Small-Cap Stock This reflects stock ownership in a company where the total value of outstanding stock is smaller than the majority of publicly owned companies. Typically, a small-cap company has less than one billion dollars in stock outstanding.Social Security Government sponsored program to provide basic pensions and disability income for U.S. citizens.Spousal IRA A working spouse may contribute to an IRA for a non-working spouse up to a maximum of $4,000 annually for 2005-2007 ($5,000 for 2008 and beyond), only where the couple is filing jointly. For persons over age 50, an additional "catch-up contribution" of $1,000 is allowed for 2006 and beyond, bring the total to $5,000.Standard Deviation A mathematical calculation that produces a number which measures the extent and frequency to which a series of investor returns varies from the average/mean of all returns. Calculated by taking the square root of the squares of the deviations from their mean.Statistics The science of collecting, organizing, presenting and analyzing numerical data to assist in making an effective decision.Stocks Certificates representing ownership in a corporation, may pay dividends and value/price may appreciate or decline in value.Surplus Funds available beyond what is needed.Systematic Risk The uncertainty that a particular security's price may fluctuate solely due to investors' sentiment in the market, also called market risk.T Target Asset Allocation The long term strategic asset allocation for an investment Portfolio.Tax Deferred Accounts/Holdings Accounts to which contributions are made and asset appreciation is not taxed until withdrawals are made. Accounts include 401(k), IRA, SEP, Roth and Pensions.Tax Planning Management of an investor's Portfolio to minimize the impact of taxes on the Portfolio's returns.Taxable Accounts Accounts which are currently subject to taxes on the realization of an appreciated asset and investment income. Accounts include brokerage accounts, mutual funds, bank accounts, money market accounts, etc. that are not held as part of a tax deferred program like IRA or 401(k).Today's Dollars Results of plan presented in dollar values that has been discounted for the impact of inflation. Allows the investor to see future plan results based on the spending power of a money today presuming an assumed inflation rate. For example, $100,000 of current spending needs would be represented as $100,000 of Today's Dollar spending need 20 years from now even if the amount in Actual Dollars is $200,000. (see Actual Dollars)Total Return Investor return objective to meet the future monetary needs. Includes increases in Portfolio value and Portfolio income.Treasury Bill U.S. government security with a maturity of under one year. Pays no interest, but yields the difference between its par value and its discounted purchase price.Treasury Bond U.S. government security with a maturity of more than 10 years. Pays interest periodically.Treasury Note U.S. government security with maturates between 1 and 10 years. Pays interest periodically.Turnover The rate capital appreciation is realized in each year.U Unrealized Capital Gains Capital gains reflected in the appreciation of a currently held unsold asset. Taxes on unrealized capital gains can be deferred indefinitely.Unsystematic Risk Unsystematic risk is risk that is unique to each particular asset. It is generally thought that diversification of the portfolio can lessen the effects of unsystematic risk.V Variable Annuity Investment tool that defers taxes on the investment's growth until the investor's retirement or the withdrawal of the funds. Unlike a fixed annuity, the funds are invested in a separate account selected by the investor and have a variable growth and variable payout, whereas the payout of a fixed annuity is fixed. The variable payout depends on the actual return in the separate account chosen.Variable Assumptions The personal inputs into the financial planning tools including retirement age, planned annual savings etc.Volatility The extent to which the value of an investment changes. Often used as a description of risk and measured as Standard Deviation.W Warrant Allows holder to purchase a specified number of shares of stock from the company, at both a specified price and time window.Wealthcare Wealthcare is a unique advisory process specifically designed to avoid unnecessary investment risk while confidently achieving client goals without undue sacrifice to their lifestyle.WealthSimulator® Simulates a variety of possible outcomes for your plan utilizing randomized historical data.Withdrawals Money taken from an account or investment.Working Plans These are plans that both the Advisor and Investor can access once either is logged into the site. To create a new working plan, click the Add New Plan button.Y Yield The yield derived from a portfolio or an individual asset represents the growth attributable to income as opposed to capital appreciation.Z Zero Coupon Bond A bond that pays no periodic interest payments, but instead, pays its par value at maturity. Yield is determined by the difference in par value and its discounted purchase price. |
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Copyright 1999-2010 Financeware, Inc., U.S. Patents 6,947,904, 7,562,040, 7,650,303, and 7,765,138. International and U.S. patents held as listed here Other U.S. and international patents pending. All Rights Reserved. |
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