Glossary
APR
Annual percentage rate; a standardized borrowing-cost measure whose exact legal definition can vary by jurisdiction and product.
APY
Annual percentage yield; a savings/deposit yield measure that reflects compounding under its stated assumptions.
Principal
The underlying amount borrowed or invested before interest.
Interest
A cost of borrowing or return paid on some savings/investments.
Compound interest
Interest calculated on principal plus previously accumulated interest.
Credit report
A record of credit-account information maintained by a credit reporting organization.
Credit score
A model-generated number based on selected credit-report information.
Emergency fund
Cash reserved for unplanned expenses or financial emergencies.
Sinking fund
Money accumulated over time for a known or expected future expense.
Liquidity
How easily an asset can be converted to usable cash without significant delay or loss.
Diversification
Spreading investment exposure among different holdings or categories to reduce concentration risk.
Inflation
A broad increase in prices over time, reducing the purchasing power of a fixed amount of money.