Glossary

The stated financial goal of an investment.

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.

A form of property ownership under which two or more people have an undivided interest in the property and in which the survivor or survivors automatically assume ownership of the interest of any joint tenant who dies.

Property owned simultaneously by more than one person. All co-owners have an equal right to use the property, and no co-owner can exclude another co-owner from the property. The most common forms of jointly-held property are joint tenancy, tenancy in common, and, in some states, community property.

A tax-deferred retirement plan for self-employed individuals and employees of unincorporated businesses. Keogh plans are similar to IRAs but have significantly higher contribution limits. Distributions from Keogh plans and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59_, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70_, you must begin taking required minimum distributions.

An employee who has valuable skills, knowledge, or organizational abilities, who is considered critical to the success of a given company.

Company-owned insurance designed to cover the cost of replacing a key employee if he or she were to die or become disabled.

A contract under which an insurance company promises, in exchange for premiums, to pay a set benefit when the policyholder dies. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder may also pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

The ease and speed with which an asset or security can be bought or sold.

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.

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.

A one-time payment of the entire amount held in an employer-sponsored retirement, pension plan, annuity, or similar account, rather than breaking payments into smaller installments.

The risk that an entire market will decline, reducing the value of the investments in it without regard to other factors. This is also known as Systemic Risk.

An investment philosophy under which investors buy and sell securities in an attempt to profit from short-term price fluctuations.

A mutual fund that invests in assets that are easily converted into cash and which have a low risk of price fluctuation. This may include money market holdings, Treasury bills, and commercial paper. Money held in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Money market funds seek to preserve the value of your investment at $1.00 a share. However, it is possible to lose money by investing in a money market fund.

A mutual fund offered by an investment company which specifically invests in municipal bonds. Mutual fund balances are subject to fluctuation in value and market risk. Shares, when redeemed, may be worth more or less than their original cost. Mutual funds are sold only by prospectus. Individuals are encouraged to consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

A stock exchange located on Wall Street in New York City, NY. Many regard the NYSE as the largest exchange in the U.S., and possibly in the world.

A retirement plan that is funded entirely by employer contributions, with no employee contributions.

A retirement or employee benefit plan that is not eligible for favorable tax treatment.

A contract under which two or more individuals manage and operate a business venture.

A loan made by an insurance company to a policyholder. Policy loans are secured by the cash value of a life insurance policy. Withdrawals of earnings are fully taxable at ordinary income tax rates. If you are under age 59_ when you make the withdrawal, you may also be subject to a 10% federal income tax penalty. Also, withdrawals may reduce the benefits and value of the contract.

A provision to a life insurance policy that is purchased separately from the basic policy and that provides additional benefits at additional cost.

The person or entity who holds an insurance policy; usually the client in whose name an insurance policy is written.

The combined investments of an individual investor or mutual fund.

A legal document that grants one person authority to act for another person in specific legal or financial matters in the event that said individual becomes incapacitated.

A contract entered into by those contemplating marriage that sets forth how their individual property will be divided should they ultimately divorce.

The original amount invested in a security, excluding earnings; the face value of a bond; or the remaining amount owed on a loan, separate from interest.

A defined-contribution plan under which employees share in company profits. The funds within the plan accumulate tax deferred.

Anything over which a person or business has legal title. Property may be held in common or privately owned.

A legal document that provides the information an investor needs to make an informed decision about an investment offered for sale to the public. Prospectuses are required by and filed with the Securities and Exchange Commission.