1
401k: A defined benefit plan provided by employers to employees in, which employees can make pre or post tax contributions to an account typically used for retirement. Employers typically agree to match contributions up to a certain level and earning grow on a tax-deferred basis. Withdrawals from your qualified plan are taxed as ordinary income and may be subject to a 10% Federal tax penalty if taken prior to age 59 1/2.
529 Plan: A savings plan in which investors can put their money in a tax-advantaged account when saving and paying for higher education. Distributions are not subject to federal-income tax or capital gains tax if the proceeds are applied directly to higher education. Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
A
American Stock Exchange (AMEX): A stock exchange originally located in New York City. AMEX was taken over by NYSE Euronext—the group that operates the New York Stock Exchange—in January 2009.
Annuity: A contract between an insurance company and an individual which generally guarantees lifetime income to the individual or whose life the contract is based in return for either a lump sum or periodic payment to the insurance company. Interest earned inside an annuity is income tax-deferred until it is paid out or withdrawn (Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.)
Asset: Anything owned that has a current value that may provide a future benefit.
B
Bear Market: A market experiencing an extended period of declining prices. A bear market is the opposite of a bull market.
Beneficiary: The person or entity who will receive benefits from a life insurance policy, qualified retirement plan, annuity, trust, or will upon the death of an individual.
Bond: An investment security in which an investor loans money to a company or government for a defined period of time with either a variable or fixed return on their investment, the funds generated by bonds are typically used by companies or governments to fund projects or ongoing operations (Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.)
Bull Market: A market experiencing an extended period of rising prices. A bull market is the opposite of a bear market.
C
CERTIFIED FINANCIAL PLANNER ™ (CFP®): A certification awarded to individuals who have completed the CFP® initial and ongoing certification standards. Those who hold a CFP® certification are members of the wealth management team who generally assist in long-term financial planning, estate planning and outlining investment objectives for clients
Consumer Price Index (CPI): The U.S. government’s main measure of inflation, calculated monthly by the Department of Labor.
Custodian: A financial institution, usually a bank or trust company, that holds customers’ cash and securities in safe keeping.
D
Dependent: A person who relies on another for his or her financial support. Within limits, those who support dependents are allowed to claim certain exemptions when filing income taxes.
Diversification: A risk-management technique applied to portfolio allocation that spreads risk among several investment types, sectors or industries which mitigates risk. (There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.)
Dow Jones Industrial Average (DJIA): The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
E
Estate: The total value of all a decedent’s assets at their date of death, the estate includes all funds, personal effects, interests in business enterprises, titles to property, real estate, stocks, bonds and notes receivable.
Estate Planning: Preparing the necessary documents and tasks necessary for an individual’s property or assets in the case of incapacitation or death. The goal of an estate plan is to have a plan in place to execute a will, minimize estate taxes, establish power of attorney, and preparing executors and beneficiaries.
Executor: The person named in a will to manage the estate of the deceased according to the terms of the will.
F
Federal Reserve System (The Fed): The United States’ central bank. The Federal Reserve System consists of a series of 12 independent banks that operate under the supervision of a seven-member, federally appointed board of governors. The Fed strives to maintain maximum employment, stable price levels, and moderate long-term interest rates. It establishes and enforces the regulations banks, savings and loans, and credit unions must follow. It also acts as a clearing house for certain financial transactions and provides banking services to the federal government.
Fiduciary: An individual who is acting on behalf of a client who is entrusted with managing their client’s assets in both an ethical and legal manner. Fiduciaries do not benefit directly from the advice given to or on behalf of their client.
Financial Advisor: Advises clients on different investment tools, budgeting, retirement and other financial decisions that may impact everyday life.
Financial Industry Regulatory Authority (FINRA): FINRA is an independent regulator that oversees all securities firms doing business in the U.S. FINRA seeks to protect investors by making sure the securities industry operates fairly and honestly.
I
Index: An average of the prices of a hypothetical basket of securities representing a particular market or portion of a market. Among the most well known are the Dow Jones Industrials Index, or the Dow; the Standard & Poor’s 500 Index, or the S&P 500; and the Russell 2000 Index. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index.
Inflation: An upward movement in the average level of prices. Each month, the Bureau of Labor Statistics reports on the average level of prices when it releases the Consumer Price Index (CPI).
Individual Retirement Account (IRA): Funds set aside in a specific investment category with certain incentives to save for retirement.
- Roth: Contributions are not tax deductible, but qualified distributions are tax free – qualified distributions have to meet the following requirements; 5 years after the opening of the account and over the age of 59 ½, disabled, withdrawing to purchase a first home ($10,000 limit) or deceased. (The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.)
- Traditional: Contributions are tax deductible, but distributions are taxed as the individual’s income tax rate.
Irrevocable Trust: A trust that cannot be altered, stopped, or canceled after its creation without the permission of the beneficiary or trustee. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.
L
Living Trust: A trust created by a living person which allows that person to control the assets he or she contributes to the trust during his or her lifetime and to direct their disposition upon his or her death.
Living Will: A written document that allows the originator to designate someone to make medical decisions on his or her behalf in the event that he or she becomes incapacitated due to accident or illness.
M
MSCI ALL COUNTRY WORLD INDEX EX USA: The MSCI All Country World Index ex USA captures the performance of securities within the MSCI All Country World Index except for equities within the USA. It is market cap-weighted and covers both developed and emerging markets.
MSCI EMERGING MARKETS INDEX: The MSCI EM (Emerging Markets) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of the Americas, Europe, the Middle East, Africa and Asia. The MSCI EM Index consists of the following emerging market country indices: Brazil, Chile, Colombia, Mexico, Peru, Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey, United Arab Emirates, China, India, Indonesia, Korea, Malaysia, Philippines, Taiwan, and Thailand.
N
National Association of Securities Dealers Automated Quotations (NASDAQ): The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
Net Worth: The total value of an individual’s assets, securities, or property at the current market price.
New York Stock Exchange (NYSE): A stock exchange located on Wall Street in New York City, NY.
NIKKEI 225 AVERAGE INDEX: The Nikkei 225 Average Index is a Japanese index that tracks the top 225 companies listed on the Tokyo Stock Exchange. It includes the most liquid Japanese stocks listed in the first section of the Tokyo Stock Exchange. It is price-weighted and yen-denominated.
P
Portfolio: The combined investments of an individual investor or mutual fund.
Portfolio Management: Creating a diverse portfolio of investment assets for a client with specific objectives and goals; and then managing that portfolio and making adjustments to asset allocation, investment mix or balancing risk against performance.
R
Registered Investment Advisor (RIA): A firm that provides advice and acts on behalf of his or her client and has a fiduciary duty to do what is in the best interest of their client.
Registered Representative: An individual who is licensed by the Securities and Exchange Commission and has the authority to trade investment products on behalf of a client.
Revocable Trust: A trust that can be altered or canceled by its grantor. During the life of the trust, any income earned is distributed to the grantor; upon the grantor’s death, the contents of the trust are transferred to its beneficiaries according to the terms of the trust.
S
Securities & Exchange Commission (SEC): The main regulatory body regulating the securities industry.
Stock: An investment security that signifies a fractional ownership of a company and have a claim on the assets and earnings of that company, stock investing involves risk including loss of principal.
Standard & Poor’s 500 Index (S&P 500): The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
T
“True Wealth”: Carson Wealth’s comprehensive approach to help clients reach a higher purpose for their wealth. True Wealth is all that money can’t buy and death can’t take away.
Trust: A fiduciary relationship where one individual (trustor) gives another (trustee) the right to hold an asset on behalf of a third-party or beneficiary for a given amount of time
- Living Trust: A trust that is created and in effect during the trustee’s lifetime.
- Testamentary Trust: A trust that is created through the will of a deceased person.
Trustee: An individual, corporation, or other entity that manages property held in a trust.
V
Volatility: The frequency at which a security or index moves, typically the more volatile the security the higher risk.
W
Wealth Advisor: A team of professionals responsible for helping clients pursue their goals; the team might include estate planning, tax planning and risk-management.
Wealth Management: A holistic approach Wealth Advisors use for financial planning to manage clients’ money for their current and future needs. For Carson Wealth, this means identifying what True Wealth – “All that money can’t buy and death can’t take away” – means to clients and using a wide range of investment tools to help clients pursue their goals.
Will: A legal document outlining how an individual would like their property and assets distributed upon their death.
Y
Yield: The percent return on an individual security, typically expressed as an annual number and subject to change.