Glossary of Terms

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An employer-sponsored investment plan for retirement. Employees make contributions to the plan and choose from a variety of investments. Employers may match a portion of employees’ contributions.

Absolute Return
Absolute return represents the simple return of an asset or portfolio over a defined period. For instance, if a $10 stock appreciated $1 over one year, it would have a 10% absolute return over that period. Absolute return differs from relative return, which represents the difference between absolute return and the return of a specified benchmark index or peer group. For example, if the above stock were to be compared with a stock market index that gained 8% over the same period, it would show a relative return of +2%, or 2% more than the benchmark.

Active Management
A mutual fund management style in which the fund manager uses analytic or forecasting tools to buy and sell individual securities for the fund portfolio.

Aggressive Growth Funds
Mutual funds that invest in companies with the potential for rapid growth, such as companies in developing industries, small but fast-moving companies, or companies that have fallen on hard times but appear due for a turnaround. The increase in potential return is accompanied by increased risk.

Annual Gift Tax Exclusion
The total amount of cash, securities, or other assets that a person is allowed to give another person without incurring federal gift tax. The current annual exclusion is $13,000 per year, per individual, or $26,000 for married couples. This amount will be adjusted periodically to reflect changes in inflation.

Annual Percentage Rate (APR)
An interest rate that expresses, on an annualized basis, the charges imposed on consumer credit. Federal regulations require companies that advertise loans or credit cards to disclose the APR in bold lettering. This enables consumers to compare rates and to see the true rate of interest repayment they would incur over the full year.

Annuity
A contract between an individual and an insurance company in which the individual pays money into an account in exchange for a guaranteed payment at or during retirement. Annuities offer tax-deferred growth potential. There are two types: fixed and variable.

Applicable Exclusion Amount
The amount of an individual’s assets that can be excluded from the federal estate tax. Currently, the applicable exclusion amount is $3,500,000 per individual. In 2010, estate taxes will be repealed, but for that year only. Starting January 1, 2011, if no action is taken by Congress, the rules and exclusion 

amounts in effect will revert to those in effect in 2001.

Asset Allocation
The process of dividing investments in your portfolio among different kinds of assets, such as stocks, bonds, real estate and cash, to try to meet a specific objective.

Back-End Load
A sales fee charged when you sell or redeem shares of a mutual fund.

Balanced Funds
Mutual funds that combine stocks and bonds in a single portfolio.

Benchmark
A market index used by individual investors, portfolio managers, and market researchers to determine how a particular market or market sector performs.

Beneficiary
One who receives the proceeds of a trust, retirement plan, or life insurance policy.

Bequest
The legal term for any asset (excluding real estate) that is transferred to an heir through a will.

Bond
An investment vehicle representing a loan to a corporation, government, or municipality. Generally, bonds pay a fixed interest rate and return the principal investment at maturity. Bonds issued by the U.S. government are guaranteed as to the timely payment of principal and interest if held to maturity; other bonds are not guaranteed and carry varying degrees of credit risk.

Bond Funds
Mutual funds that invest in bonds issued by municipalities, corporations, and the U.S. government and its agencies. Bond mutual funds do not mature and are not guaranteed, although some of the individual bonds they invest in may be.

Call Risk
The risk to a bondholder that a bond issuer may redeem, or “call,” a bond prior to its maturity date, often due to falling interest rates.

Callable Bond
A bond which the issuer has the right to redeem prior to its maturity date if its value falls significantly below its face value.

Capital Appreciation
The difference between what you paid for shares purchased and what you realize when you sell them.

Capital Gain
The profit earned from the sale of a capital asset, such as real estate or stocks. A capital gain is not “realized” until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on the owner’s income tax return for the year in which the asset was sold.

Capital Loss
The loss incurred when a capital asset, such as real estate or stock, decreases in value from its purchase price. A capital loss is not “realized” until the asset is sold.

Chapter 7 Bankruptcy Filing
A type of bankruptcy in which an individual’s debt is eliminated, but his or her assets are liquidated to repay creditors.

Charitable Contribution
A gift of cash, securities, or property to an organization whose sole purpose is to finance or perform charitable, religious, educational, scientific, artistic, literary, humanitarian or other good works. When you make a charitable contribution to an organization that has been recognized under Section 501(c)(3) of the Internal Revenue Code, you may be able to deduct the amount of the donation or the market value of the donated property from your taxable income or taxable estate.

Charitable Remainder Trust
A trust that allows you to leave assets to a charity and receive income and tax benefits at the same time. You can receive income from the trust for a specified period of time, after which all remaining assets are transferred to the charity.

Charitable Trust
A trust that lets you donate to charity and in return provides you and your heirs a tax break.

Closed-End Lease
A contract that allows you to use an asset for a specified period of time at a cost that is calculated up front. A closed-end lease generally requires the user to pay for any unusual wear and tear or damage. Closed-end leases are commonly used for automobile financing because they prescribe what the trade-in value of the car will be at the end of the lease period.

Commercial Paper
The term used for the short-term IOUs (generally three to nine months in duration) of large, creditworthy corporations.

Compounding
Earnings on an investment’s earnings. Over time, compounding can produce significant growth in the value of an investment.

Consumer Price Index
The most commonly used measure of inflation, the CPI tracks the average change in the prices of a fixed “market basket” of goods and services, including energy, food, health care, clothing, and entertainment. It is published by the U.S. Bureau of Labor Statistics.

Correlation
The degree to which the movements of two or more variables are related.

Coverdell Education Savings Account
Formerly known as the Education IRA. An account created to pay the higher education expenses of its beneficiary. Contributions, which are currently limited to $2,000 a year, are not tax deductible but any accumulated earnings are tax free if used to pay eligible bills. Contributions are not allowed after the child reaches age 18.

Credit Quality
The measure of a bond issuer’s ability to make regular interest payments and pay the face value of the bond at maturity.

Credit Report
A detailed summary of your financial affairs prepared by a third party, and usually reviewed by lenders when you are applying for a loan. The report typically lists your outstanding loans and credit cards, your employment history, your former addresses and any lawsuits in which you may have been involved. It will also indicate whether you pay your bills on time.

Credit Risk
1. A measure of a bond issuer’s ability to repay its principal and interest as promised; 2. An individual consumer’s creditworthiness, as reported on a credit rating.

Currency Risk
A factor in international investments, this is the possibility that changing currency rates will affect the dollar value of overseas investments.

Death put
A death put (also known as a survivor’s option) is an option that allows certain bonds or notes to be redeemed at face value if the owner dies. A death put may be considered a value-added enhancement to a simple bond or note because redemption from the issuer may be less costly to the estate than a sale through a broker.

Defined Benefit Plan
An employer-sponsored retirement program that is funded by the employer and in which the participant receives a fixed amount of money each year in retirement. The precise amount of this pension is based on salary and length of time on the job. This contrasts with a defined contribution plan, in which the level of income available in retirement will depend on employee contributions and investment performance.

Defined Contribution Plan
An employer-sponsored retirement program in which the participant sets aside a portion of his or her salary each year in an investment account on a tax-deferred basis. Contributions to DC plans may be deductible from current income, and employers may augment savings with matching contributions. The actual value of assets available to fund retirement will depend on investment performance. Profit-sharing, employee stock ownership, 401(k), 403(b), and 457 programs are all defined contribution plans.

Derivatives
Securities whose value is based on, or “derived,” from an underlying financial asset. Types of derivatives include futures, options, and collateralized mortgage obligations.

Disability Income Insurance
A form of insurance coverage that replaces a portion of income lost when the insured is unable to work due to illness or injury.

Diversification
The process of helping reduce risk by investing in several different types of individual funds or securities.

Dividends
A percentage of a company’s profits paid to its shareholders.

Donor
One who gives property or assets through a trust or as an outright gift.

Dow Jones Industrial Average
An index that follows the returns of 30 well-established American companies, the Dow is the most often quoted measure of U.S. stock market performance.

Education IRA
Renamed the Coverdell Education Savings Account. An account created to pay the higher education expenses of its beneficiary. Contributions, which are currently limited to $2,000 a year, are not tax deductible but any accumulated earnings are tax free if used to pay eligible bills. Contributions are not allowed after the child reaches age 18.

Emerging Markets
Lesser-developed countries that may be experiencing rapid economic growth and liberalization of government restrictions on free commerce. Examples of emerging market countries include Argentina, Malaysia, and Thailand.

Equities
Shareholders’ ownership interests in corporations — also known as stocks.

Estate Planning
Preparing for the orderly administration, management and distribution of a person’s assets and liabilities during one’s lifetime and upon death. In addition to a will, estate planning may include trusts, insurance, and other elements intended to carry out the wishes of the estate owner and improve the estate’s value.

Estate Taxes
Taxes levied by the federal and state governments on the transfer of property at death. “Property” includes tangible personal property, real estate, jointly owned property, life insurance, employee benefits, certain gifts, and other assets.

Executor
The person named in a will to handle the settlement of an estate. (Also “executrix,” a woman who is executor.)

Fannie Mae
an informal name for the Federal National Mortgage Association, a private company that buys and sells mortgage debt

First-to-Die Life Insurance
An insurance plan that insures two lives and pays proceeds at the time of the first death.

Flexible Spending Account (FSA)
An account provided by an employer that lets you set aside a certain amount of pretax dollars for medical care and other special circumstances.

Flood Insurance
Insurance covering loss or damage to property resulting from a flood, flood tide, or the like.

Foundations
Nongovernmental, nonprofit organizations established to maintain or aid educational, social, charitable, religious, or other beneficial activities.

Front-End Load
A sales fee paid when you purchase shares of a mutual fund.

Fundamental Analysis
is about using real data to evaluate a stock’s value. The method uses revenues, earnings, future growth, return on equity, profit margins and other data to determine a company’s underlying value and potential for future growth.

Gift Tax
a tax imposed on the transfer of money or property from one living person to another by gift, payable by the donor.

Ginnie Mae
a U.S. government-owned corporation whose chief function is to help finance government-guaranteed home mortgages through the sale of bonds..

Global Funds
Mutual funds that invest in securities issued in the United States and foreign nations. Global funds may be susceptible to risks such as currency fluctuation and political or economic changes.

Grantor
The owner of an estate who sets up a trust.

Gross Domestic Product (GDP)
The monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

Growth Funds
Mutual funds that strive for capital appreciation by investing in companies that are positioned for strong earnings growth.

Growth and Income Funds
Mutual funds that strive for both dividend income and capital appreciation by investing in companies with solid records of dividend payments and capital gains. Most growth and income funds strive for yields equal to or better than the money market average and to provide capital appreciation that at least beats inflation.

Guardian
A person given legal responsibility for the rights and affairs of a minor or mentally incapacitated person.

Health Care Proxy
A legal document that grants authority to make medical decisions for another person if that person is incapacitated.

High-Yield Bonds
A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds and municipal bonds

Home Equity Loan
A loan secured by a property based on the price for which the home could reasonably be expected to sell minus the balance of the original mortgage.

Incentive Stock Option
are a type of employee stock option that can be granted only to employees and confer a U.S. tax benefit. ISOs are also sometimes referred to as incentive share option..

Index Funds
The management of index funds is more “passive” than the management of non-index funds, because an index fund manager only needs to track a relatively fixed index of securities.

Individual Retirement Account (IRA)
A retirement account to which you may be able to contribute up to a specific annual amount (the maximum amount is determined by Congress). Individuals aged 50 and older may also make additional annual catch-up contributions (up to a specified amount as set by Congress). IRAs give your money the potential to grow tax-deferred and, depending on your personal circumstances, contributions may be tax deductible (withdrawals prior to age 59 ½ may be assessed a 10% IRS penalty). Withdrawals from Traditional IRAs are taxed at then-current rates. There are two types of IRAs: Traditional and Roth.

Inflation Risk
The risk that the purchasing power of savings will decrease due to rising prices.

Inflation-Indexed Bond
Promissory note that guarantees it will outpace with inflation if it is held to maturity. “I-bonds” are backed by the United States government and are indexed semiannually to the Consumer Price Index (CPI), a major inflation indicator.

Installment Debt
Promissory note underlying an Installment Credit agreement, calling for periodic payments of principal and interest to pay off the … Installment sale

Interest Rate Risk
Associated with fixed-income investments, this is the risk that a security’s price will fall when interest rates rise.

International Funds
Mutual funds that invest exclusively in securities issued outside the United States. International funds may be susceptible to risks such as currency fluctuation and political or economic changes.

Intestate
Without a will. If you die intestate, the courts will decide how your estate is divided (according to laws that vary from state to state) and appoint guardians for any minor children.

Investment Risk
The potential for an investment to decline in value or produce a lower-than-expected return.

Irrevocable Life Insurance Trust
When an individual creates an irrevocable trust to hold the ownership of a life insurance policy, the policy proceeds are removed from the gross estates of both the insured and his or her spouse…

Irrevocable Trust
A legal arrangement that gives a trustee control over select assets and cannot be modified once it is established.

Junk Bond
are high yield bonds issued by companies that are considered highly speculative because of risk of default.

Large-Cap Stock
Shares issued by large companies, typically those with market capitalizations of $10 billion or more.

Level Load
An annual sales charge applied to mutual fund shares that does not vary based on how long the investor holds the shares.

Leverage
are high yield bonds issued by companies that are considered highly speculative because of risk of default.

Liability Insurance
Insurance coverage that protects against claims of negligence or inappropriate action that allegedly resulted in bodily injury or property damage.

Liquidity
The ability to have ready access to invested money.

Living Trust
A trust that allows you to remain both the trustee and the beneficiary of the trust while you’re alive. You maintain control of the assets and receive all income and benefits. Upon your death, a designated executor distributes the remaining assets according to the terms set in the trust.

Living Will
A legal document that outlines what life-prolonging measures an individual wants taken if he or she is terminally ill or incapacitated. Rules governing living wills vary from state to state.

Long-Term Capital Gains
Net gains on assets sold 12 months or more after purchase; taxed at a maximum rate of 15%. This tax rate is in effect through December 31, 2010.

Long-Term Care Insurance
is a insurance that provides coverage for necessary personal or medical care service outside of the hospital.

Market Capitalization
Measuring the size of a public company in comparison to the share price time the outstanding number of shares.

Market Risk
Risk which is common to an entire class of assets or liabilities.

Market Timing
An investment strategy in which the investor tries to be in the market when prices are rising and out of the market when prices are falling in an attempt to boost returns.

Maturity
The date by which an issuer promises to repay a bond’s face value.

Medicare
A federal program that assists people age 65 and older by helping to pay for health care expenses. The program has two parts — Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) provided under the Social Security Act.

Medigap
An individual insurance policy for retirees that can help pay medical expenses not covered by the Medicare system.

Money Market Funds
a mutual fund that invests in the money market. A money market fund is a type of mutual fund that invests in low risk securities. Generally because the risk is lower the rate of return or interest rate is lower as well however, it will be higher than a standard savings account.

Mortgage
A loan used to finance the purchase of a home or other property. The borrower gives the lender a lien on property as security for the repayment of the loan. The borrower has full use of the property and the lien is removed when the obligation is paid in full. Mortgage repayment periods usually run between 10 and 30 years.

Mortgage-Backed Securities
Fixed-income securities backed by pools of mortgage loans.

Municipal Bonds
A municipal bond is a bond that is issued by a city or some type of government or agencies.

Mutual Fund
A mutual fund that invests in municipal bonds, operating either as an investment trust or as an open-end fund. Investopedia Says: Because the bonds are local government issues, they usually help to maximize tax-exempt income.

Nasdaq Composite Index
An index of over 3,200 issues that was created in 1971 to measure all domestic common stocks that are traded “over the counter” in the Nasdaq market; that is, they are not listed on the major stock exchanges.

National Flood Insurance Program
Federal coverage against loss resulting from flooding; widely available at low cost under a program developed by private industry and the federal government.

No-Load Fund
A mutual fund that does not charge a sales fee. Such funds may charge a 12b-1 fee to cover marketing expenses. See the applicable prospectus for more information.

Nonqualified Stock Option
A non-qualified stock option allows a buyer to purchase stock at a certain price, but he will have to pay income taxes on the gains generated by selling it. This differs from an incentive stock option, which “qualifies” for a tax benefit, but must be held for a specific amount of time before it can be sold.

Normal Retirement Age
The age at which an individual is eligible to receive full Social Security benefits. Individuals can retire earlier, but benefits may be reduced.

Open-End Lease
A lease that involves an additional payment that may be charged at the end of the lease period, depending on the value of the property when it is returned.

Passive Management
A mutual fund management style in which the fund manager simply buys whatever stocks are represented by a well-known market index, and trades only when the composition of the index changes.

Premium
The periodic payment made to an insurance policy or an annuity. Also can be the sale price of a bond or a stock exceeding the par or face value

Probate
A court-supervised process that determines whether a person’s will is authentic. Probate usually surrounds a probate judge’s review of a will and an executor’s efforts to distribute property as specified by the decedent.

Prospectus
A official document that describes a mutual fund to prospective investors. It has information required by the SEC, such as investment objectives and policies, risks, services, and fees.

Q-TIP trust
A marital-deduction trust in which the surviving spouse receives income from the trust’s assets for life but the trust’s principal is left to someone else.

Repurchase Agreement
is also known as a repo or Sale and Repurchase Agreement. It allows the borrower to use a financial security as collateral for a cash loan.

Revenue Bond
Bonds issued by government entities to finance specific public projects. Revenue from a given project is used to repay investors.

Revolving Credit
Revolving credit is something you may want to stay away from in this economic climate. It is considered continous credit up to a certain credit limit.

Roth 401(k) Plan
An employer-sponsored investment plan for retirement. Employees make after-tax contributions to the plan, any earnings grow tax deferred and qualified withdrawals are tax free. Withdrawals prior to age 59 ½ may be subject to a 10% penalty tax. Employers may match a portion of employees’ contributions.

Roth IRA
is an individual retirement account that was established under the tax payer relief act of 1997 and was named after the it’s cheif legislative sponser William Roth. There are key differences between the Roth IRA and a traditional IRA. Contributions are not tax deductible, but any growth is tax free and qualified withdrawals may be tax free. Certain holding periods and income restrictions apply.

Rule of 72
A formula that helps answer the question, “How many years will it take my money to double?” based on a hypothetical constant rate of return. Use the following formula: 72 / Annual Rate of Return = Approximate Number of Years It Will Take for Your Money to Double.

Savings Bond
Bonds issued by the U.S. Treasury, typically in amounts ranging from $50 to $10,000. Savings bonds are noncallable — which means the government cannot retire them before the maturity date — and are also nontransferable. Bondholders cannot transfer them to someone else. Because savings bonds are backed by the full faith and credit of the federal government, investors would say them to have relatively low investment risk.

Section 529 Plans
A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996. 529 Plans can be used to meet costs of qualified colleges nationwide. In most plans, your choice of school is not affected by the state your 529 savings plan is from. You can be a CA resident, invest in a VT plan and send your student to college in NC. Check to see if your institution is eligible under 529 rules. Every state now has at least one 529 plan available. It’s up to each state to decide whether it will offer a 529 plan (possibly more than one) and what it will look like, meaning 529 plans can differ from state to state. You should research the features and benefits of your plan before you invest.State-sponsored, tax advantaged plans that encourage individuals to invest in a pool of stocks and bonds for college savings. Contribution limits for Section 529 Plans vary from state to state. Generally, the asset allocation formula may be determined by a child’s age (generally more aggressive for younger children and more conservative as children approach college age) or may be selected by the investor based on his or her risk tolerance. Distributions made to pay qualified education expenses are tax free.

Sector Funds
A mutual fund which invests entirely or predominantly in a single sector. Sector funds tend to be riskier and more volatile than the broad market. These funds invest in specific industries or niches to gain above average returns. . A mutual fund which invests entirely or predominantly in a single sector. Sector funds tend to be riskier and more volatile than.broadly diversed funds as more so then single economic,political or regulatory developments.

Securities and Exchange Commission (SEC)
which was created in 1934 to restore the public’s confidence in the stock market after the Great Depression of 1929.

Series E Savings Bonds
Series E Savings Bonds are no longer available for purchase as of June 1980 and were replaced by EE Savings Bonds. Bonds that were issued by the U.S. government between 1941 and 1979 that were purchased for 75% of the bond’s stated denomination. These bonds were the precursor to Series EE and Series HH bonds. Outstanding Series E bonds may be exchanged for its successor.

Series EE Savings Bonds
Bonds issued by the U.S. government at a 50% discount from par. Also known as Energy Savings Bonds, nonmarketable Series EE bonds come in denominations of $25, $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000. Series EE Bonds replaced Series E Bonds and are subject to the same taxes.

Share Classes
The same fund but with different sales charge structures (for example, front-end load; back-end load, level-load, etc.), which provide alternatives to meet differing investor needs

Sharpe Ratio
Indicates the size of return relative to risk taken. The Sharpe ratio measures the fund’s return (with volatility of one percent) in excess of a risk-free return. The higher the Sharpe ratio, the more favorable the relationship between return and risk.

Short Positions
Selling shares that you do not own in hope of being able to buy them back at a cheaper rate.

Small-Cap Stock
Shares issued by companies with capitalizations of $3 billion or less.

Social Security Statement
Annual document mailed to American workers age 25 and older by the Social Security Administration (SSA). Created to help U.S. taxpayers plan for their financial future, the statement provides estimates of retirement, disability, and survivor benefits.

Standard Deviation
Statistical measure that shows the likelihood of an investment to yield above- or below-average returns over a period of time. A statistical formula measuring variance from a norm

Stock
A share of ownership in a publicly held company. Owners of stock receive voting rights on issues affecting the company and may receive dividends.

Stretch IRA
is a method for extending the duration of tax-deferred benefits of an IRA to a succession of beneficiaries beyond the original designated beneficiary.

Structured note
is a hybrid security that includes several financial products, typically a stock or bond plus a derivative. A simple example would be a five-year bond tied together with an option contract.

Successor Trustee
A successor trustee is the person or entity taking over the management of a trust upon the death or incapacitation of the original trustee

Survivorship Life Insurance
Known as second-to-die and last-to-die, this method of life insurance coverage pays a benefit upon the death of the last surviving insured person.

Swap
is a derivative in which two counterparties exchange certain benefits of one party’s financial instrument for those of the other party’s financial instrument. The benefits in question depend on the type of financial instruments involved.

Tax Deferral
A benefit to investing within a traditional IRA or 401(k) or to purchasing some life insurance products. The principle of tax deferral aids in looking for long-term investment growth. Tax-deferred assets in a traditional IRA or 401(k) may be subject to a 10% IRS penalty if withdrawn prior to age 59 ½. The second benefit of tax deferral is that investments are usually made when a person is earning higher income and is taxed at a higher tax rate. Withdrawals are made from an investment account when a person is earning little or no income and is taxed at a lower rate.

Taxable-Equivalent Yield

Technical Analysis
is a security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume.

Term Life Insurance
An insurance policy in effect for a specific period of time (the term) that pays a predetermined amount of money to a beneficiary in the event that the insured dies while the policy is inforce. There are variations of term insurance.

Time Deposits
A low-risk savings vehicle, such as a certificate of deposit, with maturities typically ranging from seven days to several years. Time deposits often pay a higher interest rate than traditional savings accounts, but penalties may apply for withdrawing money before maturity. may pay interest
at a higher rate than demand deposit accounts, such as checking or money market accounts, from which you can withdraw at any time.

Total Return
On a portfolio of investments takes into account not only the capital appreciation on the portfolio, but also the income received on the portfolio.

Traditional 401(k) Plan
An employer-sponsored investment plan for retirement. Employees make pre-tax contributions to the plan and all contributions and earnings grow tax deferred until withdrawn, when ordinary income taxes will apply. Withdrawals prior to age 59 ½ may be subject to a 10% penalty. Employers may match a portion of employees’ contributions.

Traditional IRA
A retirement account to which you can contribute up to a specified amount each year (the maximum amount is determined by Congress). Individuals aged 50 and older may also be eligible to make additional annual catch-up contributions (up to a specified amount). IRAs give your money the potential to grow tax-deferred and, depending on your personal circumstances, contributions may be tax deductible (withdrawals prior to age 59 ½ may be assessed a 10% IRS penalty). Withdrawals from Traditional IRAs are taxed at then-current rates.

Treasury Bills
Are typically issued at a discount from the par amount (also called face value). … You can buy a bill in Treasury Direct or Legacy Treasury Direct, or through a bank, broker, or dealer.

Trust
An agreement in which a grantor transfers assets to a trustee for the purpose of benefiting one or more beneficiaries.

Trustee
The administrator of a trust.

U.S. Savings Bonds
Represent loans to the federal government, to be repaid in full, with interest, at a specified future date known as the maturity date. Series EE bonds issued today are sold at a 50% discount to face value (the amount paid at maturity).

Unlimited Marital Deduction
This provision of federal estate tax laws allows individuals to leave their entire estate to a surviving spouse tax free if the surviving spouse is a U.S. citizen.

Variable Annuity
A variable annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.

Volatility
A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index.

Zero Coupon Bond
are bonds that do not pay interest during the life of the bonds. Instead, investors buy zero coupon bonds at a deep discount from their face … When a zero coupon bond matures, the investor will receive one lump sum equal to the initial investment plus the imputed interest