Abbreviations and Acronyms
Brief descriptions are included to assist new investors.
- AA - Asset Allocation; one of the most important decisions that investors make
- AAGR - Annual Growth Rate
- AFFO - Adjusted Funds From Operations
- AGI - Adjusted Gross Income
- AMT - Alternative Minimum Tax. An extra tax some people have to pay on top of the regular income tax. See: Alternative Minimum Tax 101
- APY - Annual Percentage Yield, See: APR versus APY
- APR - Annual Percentage Rate, See: APR versus APY
- AUM - Assets Under Management. Funds "managed" by an investment adviser who receives a fixed percentage of a client's portfolio.
- BDC - Business Development Company. One of several investment company structures. See: Business Development Company
- BTM - Book To Market ratio (inverse of Price to Book). Also known as the "price-equity ratio." See: Price to Book
- CAGR - Compound Annual Growth Rate
- CAPM - Capital Asset Pricing Model. A financial model used to analyze risk versus return.
- CCF - Collaterized Commodity Futures
- CD - Certificate of Deposit
- CEF - Closed End Fund. One of several investment company structures. See: Closed End Funds
- CFP - Certified Financial Planner. An investment adviser who has passed the CFP certification requirement.
- CG - Capital Gains. The profit (or loss) when you sell a stock. See: Capital gains distribution
- CMA - Cash Management Account. A marketing term for services offered to bank customers. See: Cash management
- COLA - Cost of Living Adjustments
- CPI - Consumer Price Index, See: Consumer price index
- CRSP - Center for Research in Security Prices A comprehensive securities database from the University of Chicago, Booth School of Business.
- DCA - Dollar Cost Averaging. Contributing to your investments over time. See: Dollar cost averaging
- DDM - Dividend Discount Model. A way to determine if a stock price is a good buy. Used by financial analysts, not for new investors.
- DFA - Dimensional Fund Advisors, an investment firm.
- DI - Debt Instrument
- DPSP - Deferred Profit Sharing Plan
- DRIP - Dividend Re-Investment Plan. A way to reinvest stock dividends. See: Dividend Reinvestment Plan - DRIP
- DTC - Depository Trust Company. The company which maintains security ownership records.
- EAFE - Europe, Australia and Far East. A regional equity grouping. See: Domestic/International
- EBITA - Earnings Before Interest, Taxes and Amoritization
- EM - Emerging Market. Nations with social or business activity in the process of rapid growth and industrialization. Emerging Markets Index Returns lists the emerging market countries.
- EMH - Efficient Market Hypothesis. Share prices already account for changes in market conditions, thus you can't "beat the market."
- EMT - Efficient Market Theory (same as EMH)
- EPS - Earnings Per Share. Used in conjunction with the Price/Earnings ratio.
- ERISA - Employee Retirement Income Security Act. A U.S. law that sets minimum standards for most voluntary pension and health plans in private industry. See: ERISA
- ERP - Equity Risk Premium
- ER - Expense Ratio. Costs used to operate a fund. Using low cost funds is a key objective.
- ESA - Education Savings Account. A tax deferred account dedicated to saving for education expense. See: Coverdell Education Savings Accounts
- ETF - Exchange Traded Fund. One of several registered investment company structures. Often compared with a mutual fund.
- FF - Fama-French i.e. Eugene Fama and Kenneth R. French, coauthors of the Fama-French 3-Factor model. The Morningstar Style box is based on this model.
- FF3FM - Fama/French 3-factor model. See above.
- FFO - Funds From Operations
- Fido - Jocular nickname for Fidelity Investments
- FIFO - First-In, First-Out
- FRA - Full Retirement Age. The age used to qualify for a Primary Insurance Amount (PIA). See: Social Security
- FTC - Foreign Tax Credit. A way to compensate against double taxation when owning stock outside the U.S. See: Foreign tax credit
- GAAP - Generally Accepted Accounting Principles. A set of accounting principles, standards and procedures used to compile financial statements.
- GARP - Growth at a reasonable price
- GDP - Gross Domestic Product
- GIC - Guaranteed Investment Contract. An insurance company contract that provides principal preservation and a specified rate of return. See: Stable Value Fund
- GNMA- Goverment National Mortgage Association. Also known as "Ginnie Mae." See: GNMA
- GO - General Obligation ( municipal bond). A municipal bond secured by the taxing and borrowing power of the municipality issuing it.
- HIFO - Highest In, First Out. Highest cost of purchase is the first to be used or taken out of stock.
- HmL - High minus Low (High B/P return - Low B/P return) Value Premium. See: Fama and French Three-Factor Model
- HSA - Health Savings Account
- ILB - International Large Blend. A stock classification. See: Stock Style boxes (Applies to all stocks, not just international.)
- ILG - International Large Growth. A stock classification. See: Stock Style boxes (Applies to all stocks, not just international.)
- ILV - International Large Value. A stock classification. See: Stock Style boxes (Applies to all stocks, not just international.)
- IPS - Investment Policy Statement. An Investment Policy Statement helps investors stay on track with their long-term goals.
- IRA - Individual Retirement Account.
- iREIT - International Real Estate Investment Trust.
- IRS - Internal Revenue Service
- ISB - International Small Blend. A stock classification. See: Stock Style boxes (Applies to all stocks, not just international.)
- ISG - International Small Growth. A stock classification. See: Stock Style boxes (Applies to all stocks, not just international.)
- ISV - International Small Value. A stock classification. See: Stock Style boxes (Applies to all stocks, not just international.)
- KISS - Keep It Simple, Stupid
- LB - Large Blend. A stock classification. See: Stock Style boxes
- LG - Large Growth. A stock classification. See: Stock Style boxes
- LT - Long Term. Usually used to denote the maturity or duration of a fixed income security. See: Bond Style boxes
- LV - Large Value. A stock classification. See: Stock Style boxes
- MMF - Money Market Fund. A mutual fund often used because it can be easily converted to cash.
- MPT - Modern Portfolio Theory, also Modern portfolio theory. Diversify your assets to minimize risk to your investments.
- MSCI - Morgan Stanley Capital International Inc. A major provider of stock market indexes.
- MVO - Mean Variance Optimization. A method developed by economist Harry Markowitz for diversifying a portfolio (Modern Portfolio Theory). See MPT above.
- NAREIT- National Association of Real Estate Investment Trusts
- NASD - National Association of Securities Dealers
- NAV - Net Asset Value. A mutual fund's price per share.
- OP - Original Poster (not investing related).
- P/B - Price Book Ratio. Also known as the "price-equity ratio." See: Price to Book
- P/E - Price Earnings Ratio. A ratio of a company's current share price compared to its per-share earnings. See: P/E
- QDI - Qualifying Dividend Income. A dividend which meets IRS requirements to (usually) get a lower tax rate. See: Qualified dividend
- QJSA - Qualified Joint and Survivor Annuity (pension plans)
- RAFI - Research Affiliates Fundamental Index®, one of a number of indexes which take account of factors besides market capitalization.
- RE - Real Estate
- REIT - Real Estate Investment Trust. An asset class based on real estate interests.
- RMD - Required Minimum Distributions. See: Required Minimum Distributions
- RTM - Reversion to the Mean. Over the long-term, changes will come back to an average value. See: Remarks by Mr. Bogle regarding the stock market
- SARSEP - Salary Reduction Simplified Employee Pension Plan
- SCV - Small Cap Value. A stock classification. See: Stock Style boxes
- SD - Standard Deviation. In finance, a way to measure volatility (price variation)
- SDBA - Self Directed Brokerage Account. An employer retirement plan option which allows employees to choose funds outside the plan.
- S&D - Slice and Dice. Adjusting your stock allocations to intentionally deviate from the market capitalization (market "cap") weighting. (For advanced investors only.)
- SEC - Securities and Exchange Commission
- SEP - Simplified Employee Plan. An employer retirement plan. See: SEP
- SmB - Small minus Big (Small stock return - Large stock return) Size premium. See: Fama and French Three-Factor Model
- S&P - Standard and Poors. A provider of security credit ratings and stock indexes. See: Stock Market Indexing
- SPIA - Single Premium Immediate Annuity. An insurance contract that pays a fixed/or variable amount for the life of the annuitant (policy holder). See: bob90245's primer
- SRI - Socially Responsible Investing. An approach that takes corporate responsibility and societal concerns into consideration.
- SS - Social Security
- SSI - Supplemental Security Income
- ST - Short Term. Usually used to denote the maturity or duration of a fixed income security. See: Bond Style boxes
- STRIPS - Separate Trading of Registered Interest and Principal of Securities
- SWF - Sovereign Wealth Fund
- SWR - Safe Withdrawal Rate. The percentage of assets that can be safely withdrawn from your retirement portfolio.
- TBM - Total Bond Market. When referred as a fund, such as Vanguard Total Bond Market Index Fund (VBMFX), the implication is for the U.S. bonds only.
- TDF - Target Date Fund. A "fund-of-funds" which fulfills a complete asset allocation need. Recommended for simplicity. See also: Vanguard Target Retirement Funds, Glide paths
- TIAA-CREF - Teachers Insurance and Annuity Association - College Retirement Equities Fund
- TIPS - Treasury Inflation Protected Securities. Bonds issued by the U.S. Treasury. Interest and principal varies with inflation.
- TISM - Total International Stock Market. When referred as a fund, such as the Vanguard - Total International Stock Index Fund (VGTSX), the implication is worldwide (global) stocks with the exception of the U.S. market.
- TLH - Tax Loss Harvesting. A technique which uses losses from a taxable investment, e.g. stocks, to reduce income taxes due.
- TR - Target Retirement (see TDF above) or Total Return (The actual rate of return of an investment.)
- TSM - Total Stock Market. When referred as a fund, such as the Vanguard Total Stock Market Index Fund (VTSMX), the implication is for the U.S. stock market only.
- TSP - Thrift Savings Plan. An employer retirement plan for U.S. government employees and U.S. military personnel.
- TT - TurboTax. Tax preparation software by Intuit, Inc.
- USD - US Dollar
- VA - Variable Annuity. An annuity (periodic payment) which fluctuates over time. It is very different from a Fixed SPIA and should only be considered under limited circumstances.
- VBMFX, VFSVX, VFWIX, VTSMX, etc. - Ticker symbols for Vanguard mutual funds
- VEU, VNQ, VSS, VTI, VWO, etc. - Ticker symbols for Vanguard ETFs
- WSJ - Wall Street Journal. A business and financial news publication. See: Wall Street Journal
- YTD - Year to Date
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