Abbreviations and Acronyms

Reference Material
Selected articles
Financial Websites and Blogs Glossary Taylor Larimore's Investment Gems Tools and Calculators
Selected Topics
Academics Books and Authors Google Docs.spreadsheets FAQs Resources and Links
Data Sources
EDGAR database Index Returns Vanguard SEC filings

Brief descriptions are included to assist new investors.

A-C

• 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.

D-F

• 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

G-K

• 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

L-Q

• 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)

R-T

• 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.

U-Z

• 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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