What does that mean? IDK
We speak in acronyms these days, and the financial world has its own shorthand. The more you understand these terms, the easier it can be to make smart financial decisions. Here are some key abbreviations and what they mean for your financial decision-making.
APR: Comparing lenders for a mortgage or car loan? Pay more attention to the Annual Percentage Rate (APR) than the interest rate. APR shows you interest plus fees and other charges, which can add up. Tip … APR affects student loans as well, so take time to investigate your options, and check out these college-funding ideas.
BRB: Be right back, as in “BRB. I have to compare APRs before I go house hunting.”
CAGR: Compound annual growth rate (CAGR) is a wealth-building tool. Imagine a small snowball rolling down a steep hill. The longer it rolls, the more snow it accumulates. Your original investment (the snowball) becomes a snow-boulder by accumulating earnings on top of earnings over time. Tip … Start saving early and remember your tax burden also compounds, so plan accordingly.
EM?: Excuse me? As in “EM? If I invest $200 a month starting now, I’ll have how much when I retire?”
FICO: If you’ve taken out a loan or opened a bank account, Fair Isaac Corp. (FICO) is probably tracking you. Lenders use FICO’s predictive analytics to calculate your credit-worthiness. Tip … To raise your FICO score, pay your bills on time and avoid carrying high balances on credit cards.
GR8: Great, as in “Wow. I just checked my credit rating and my FICO score is GR8!”
HNWI: What many of us aspire to be: high net worth individuals, with over $1 million in liquid financial assets. Tip… Become a world-class saver, starting today. Some of the savviest CEOs understand the importance cash flow plays in saving and building wealth. What’s more, their approaches to savings and cash flow can be adopted by people of every income bracket.
IRA: Individual Retirement Accounts, or IRAs, are a popular way to save for retirement. Don’t depend on Social Security to be your sole funding source in retirement — you’ll need additional income. Tip … An IRA is only part of the equation. Securing guaranteed income in retirement is the key to retiring with confidence.
JK: Just kidding, as in “Wrote an IOU to my IRA. JK—I set up monthly auto deposits.”
ROI: Return on investment, or ROI, measures the profitability or benefit earned on money you’ve invested. Tip … A smart strategy to optimize your investment mix is to create a well-diversified portfolio with stocks, bonds, cash and whole life insurance, balanced to your age and life goals.
SMH: Shaking my head, as in “Made appt with financial professional to talk about retirement planning. SMH—Adulting is hard.”
TCO: Total cost of ownership (TCO) shines a light on the full costs of owning an asset. Whether it’s a car or a house, the price tag is just the tip of the iceberg. Make sure you identify all costs for maintenance, upkeep, service, and so on, so you can budget accordingly.
WFM: Works for me, as in “Minimizing my TCO WFM.”
And finally, one last acronym for you: FEC, or financial and emotional confidence. Nearly 80 percent of Americans report being seriously stressed out, especially about finances. How confident are you? Take our Financial & Emotional Confidence Quiz to find out how you can start improving your financial confidence today.
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2022-140167 Exp. 06/2024