| Annuity |
A contract by which an insurance company agrees to make regular payments to someone for life or a fixed period. |
| Balanced Fund |
A fund that invests in both equities ( stocks and preferred stocks) and debt instruments (bonds) to reduce risk by investing in different markets. |
| Balanced Portfolio |
A set of investments balanced between riskier and more conservative funds. |
| Bond Fund |
A fund that holds mainly municipal, corporate, and/or government bonds. |
| Compound Interest |
Interest credited daily, monthly, quarterly semiannually, or annually on both principal and previously credited interest. |
| Contribution |
Payment to an annuity or retirement plan. |
| Death Benefit |
The amount payable to a beneficiary at the annuitant’s or insured death. Also referred to as survivor’s benefit. |
| Deferred Compensation |
An arrangement in which part of an employee’s income is deferred to a future date to avoid taxation in the current year. |
| Defined Benefit Plan |
A retirement plan that usually provides a benefit based on a percentage of salary times years of service. |
| Defined Contribution Plan |
A retirement plan that specifies a rate of employer and/or employee contributions usually defined as a percentage of salary. How much income will depend on several factors, including salary level, duration of contributions, investments earnings and age at retirement. |
| Delayed Vesting |
A provision requiring that an employee complete a specific period of service before being entitled to retirement benefits. |
| Diversification |
Spreading assets across a mix investments to reduce risk. |
| Fixed Annuity |
A traditional insurance investment vehicle, often used for retirement accounts, that guarantees principal and a specified interest rate and may also offer dividends. |
| Global Fund |
A fund with holdings in worldwide investments. |
| Growth Fund |
A fund that invests in the stocks of companies whose earnings are reinvested to finance research, development, and expansion. |
| Index Fund |
An investment fund containing securities or equities that attempts to mirror the performance of a particular broad market by holding a similar percentage position of individual securities. |
| Interest |
Cost of borrowing, expressed as a percentage of the amount borrowed. Or, the returned earned on an investment. |
| Investment |
Purchasing stocks, bonds, mutual funds, options, real estate, etc., with the expectation on future income or capital gains. |
| Lump-Sum Distribution |
The payment of the entire value of a profit-sharing plan, pension plan or other investment. |
| Minimum Distribution |
The amount required by federal law to be paid from most tax-favored retirement plans, generally beginning by April 1 of the calendar year following the year in which the participant turns 701/2. |
| Mutual Fund |
An investment company that pools monies of individuals to but securities selected to meet specific criteria and goals. |
| Portfolio |
The set of stocks, bonds, and other securities held by an investor or mutual fund. |
| Principal |
The original value of an investment or debt. |
| Rollover |
An employee’s transfer of retirement funds from one retirement plan to another plan of the same type of IRA without incurring a tax liability. The transfer must be made within 60 days of receiving cash distribution. The law requires 20% federal income tax withholding on money eligible for rollover if it is not moved directly to the second plan or investment company. |
| Salary Reduction |
Contributions withheld from an individual’s salary under the terms of an agreement between an employer and employee. These funds are not subject to current federal (and usually state and local) income taxes. |
| Securities |
Investment instruments issued by corporations or government bodies or other entities that offer investors shares of ownership or a creditor relationship. |
| Socially Responsible Investment Fund |
A ”socially sensitive” fund that makes investments committed to promoting politically conscious, social or moral issues. |
| Tax-Deferred Annuity (TDA) |
An annuity available to certain groups, such as employees of nonprofit and educational organizations. A part of the employees’ income is excluded from current taxation and invested in stocks, bonds, etc. Contributions and their earnings are tax deferred until they are withdrawn from the plan. |
