To use this Carson Glossary of Financial Terms, simply use the search box to the right, or click on the letters below to go directly to the glossary terms that begin with the corresponding letter.


What is the
199a Tax Deduction
A provision in the Tax Cuts and Jobs Act of 2017 which provides for the deduction of up to 20 percent of qualified domestic income for the owners of pass-through businesses, which include:
- Sole proprietorships
- Partnerships
- LLCs not electing taxation as Corporation
- S Corporations
What is a
A defined benefit plan provided by employers to employees in, which employees can make pre or post tax contributions to an account typically used for retirement. Employers typically agree to match contributions up to a certain level and earning grow on a tax-deferred basis. Withdrawals from your qualified plan are taxed as ordinary income and may be subject to a 10% Federal tax penalty if taken prior to age 59 1/2.
What is a
529 Plan
A savings plan in which investors can put their money in a tax-advantaged account when saving and paying for higher education. Distributions are not subject to federal-income tax or capital gains tax if the proceeds are applied directly to higher education. Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
What is the
American Stock Exchange (AMEX)
A stock exchange originally located in New York City. AMEX was taken over by NYSE Euronext—the group that operates the New York Stock Exchange—in January 2009.,NYSE%20Euronext%20acquired%20the%20AMEX.
What is an
A contract between an insurance company and an individual which generally guarantees lifetime income to the individual or whose life the contract is based in return for either a lump sum or periodic payment to the insurance company. Interest earned inside an annuity is income tax-deferred until it is paid out or withdrawn (Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.)
What is an
Anything owned that has a current value that may provide a future benefit. /insights/blog/estate-planning-fundamentals-to-help-you-start-the-conversation/


What are
Baby Boomers
A person born between 1946 and 1964, i.e. the generation that is currently retiring.
What is a
Bear Market
A market experiencing an extended period of declining prices. A bear market is the opposite of a bull market.
What is a
The person or entity who will receive benefits from a life insurance policy, qualified retirement plan, annuity, trust, or will upon the death of an individual.
What is a
An investment security in which an investor loans money to a company or government for a defined period of time with either a variable or fixed return on their investment, the funds generated by bonds are typically used by companies or governments to fund projects or ongoing operations (Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.)
What is the
Bucket Approach
A segmentation approach to a financial plan that breaks a time of life down into three distinct time horizons, or buckets, and allocates expenses and income streams according to each segment.
What is a
Bull Market
A market experiencing an extended period of rising prices. A bull market is the opposite of a bear market.
What is a
Also called “bundling,” this is the practice of combining charitable donations over two to three years in order to reach the minimum standard deduction and receive a favorable tax treatment. Particularly en vogue after the passage of the Tax Cuts and Jobs Act in 2017.


What is a
Certified Financial Planner™ (CFP®)
A certification awarded to individuals who have completed the CFP® initial and ongoing certification standards. Those who hold a CFP® certification are members of the wealth management team who generally assist in long-term financial planning, estate planning and outlining investment objectives for clients
What is
Compound Interest
“Interest on interest” in the sense of interest based on the principal and the growth on that principal. Compound interest, then, grows faster than simple interest which is just based on the principal. /insights/blog/compounding-wealth-and-wisdom/
What is the
Consumer Price Index (CPI)
The U.S. government’s main measure of inflation, calculated monthly by the Department of Labor.
What is a
A financial institution, usually a bank or trust company, that holds customers’ cash and securities in safe keeping.


What is a
A person who relies on another for his or her financial support. Within limits, those who support dependents are allowed to claim certain exemptions when filing income taxes.
What is
Digital Currency
Online or digital representations of something of value. This can be as complex as Bitcoin, but also as simple as a Starbucks rewards account. /insights/blog/digital-assets-what-they-are-and-why-you-already-own-some/
What is
A risk-management technique applied to portfolio allocation that spreads risk among several investment types, sectors or industries which mitigates risk. (There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.)
What is a
Donor-Advised Fund
A special account used for charitable purposes which you can donate into and withdraw from at a later date or over a schedule. The tax relief for the donation is immediate, then the donations can be made over several years.
What is the
Dow Jones Industrial Average (DJIA)
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.


What is an
Emergency Fund
Liquid assets you have on hand to cover expenses in case of emergency circumstances (job loss, medical emergency, etc.). Three to six month’s expenses is often the rule of thumb, and this is a good safety measure to protect retirement savings and other investments in urgent situations.
What is an
The total value of all a decedent’s assets at their date of death, the estate includes all funds, personal effects, interests in business enterprises, titles to property, real estate, stocks, bonds and notes receivable.
What is
Estate Planning
Preparing the necessary documents and tasks necessary for an individual’s property or assets in the case of incapacitation or death. The goal of an estate plan is to have a plan in place to execute a will, minimize estate taxes, establish power of attorney, and preparing executors and beneficiaries. /insights/blog/estate-planning-fundamentals-to-help-you-start-the-conversation/
What is an
The person named in a will to manage the estate of the deceased according to the terms of the will.


What is the
Federal Reserve System (The Fed)
The United States’ central bank. The Federal Reserve System consists of a series of 12 independent banks that operate under the supervision of a seven-member, federally appointed board of governors. The Fed strives to maintain maximum employment, stable price levels, and moderate long-term interest rates. It establishes and enforces the regulations banks, savings and loans, and credit unions must follow. It also acts as a clearing house for certain financial transactions and provides banking services to the federal government.
What is the
Federal Funds Rate
Overnight lending interest rate banks charge each other to borrow money. Banks are required by the Fed to keep certain reserves in order to keep running, but can lend out reserves they hold above that requirement. The rate is set by the committee of the Federal Reserve according to current economic conditions. They lower the rate to infuse a down economy and heighten the rate to lessen spending when the markets are up. /insights/monthly-newsletters/from-washington-to-your-wallet-how-the-federal-funds-rate-affects-personal-finance/
What is
Fee Transparency
Advisors being upfront and straightforward about how much they are charging for services. Commissions, hidden fees and other expenses can be added to advisory services, and can add up to large amounts over time.
What is a
An individual who is entrusted to manage their clients’ assets in both an ethical and legal manner, acting in their clients’ best interest. Fiduciaries do not benefit directly from the advice given to or on behalf of their clients. /insights/blog/football-and-finance-the-secret-sauce-to-success/
What is the
Financial Industry Regulatory Authority (FINRA)
FINRA is an independent regulator that oversees all securities firms doing business in the U.S. FINRA seeks to protect investors by making sure the securities industry operates fairly and honestly.
What is a
Flexible Spending Account (FSA)
A tax-advantaged, employer-sponsored account that allows you to deposit from your salary and withdraw for qualified medical and dental expenses. This is a “use it or lose it” plan that has to be used by the end of the plan year.


What is
Goals-Based Planning
A financial planning approach starting with your goals, then going back through your assets to see your starting point. Then you and your advisor look how small financial choices today will affect the larger financial picture tomorrow.
What is a
Gun Trust
A type of revocable trust in which you can transfer ownership of firearms to the next generation without risking violation of gun-ownership laws.


What is a
Health Savings Account
An account offered by some employers as a savings tool for qualified health expenses that offers a triple tax advantage.
What is
Holistic Financial Planning
Financial planning that looks beyond increasing and protecting revenue to also include funding financial objectives. Paying for education for children and grandchildren, charitable giving and legacy planning are all examples of holistic planning.


What is an
An average of the prices of a hypothetical basket of securities representing a particular market or portion of a market. Among the most well known are the Dow Jones Industrials Index, or the Dow; the Standard & Poor’s 500 Index, or the S&P 500; and the Russell 2000 Index. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index.
What is
An upward movement in the average level of prices. Each month, the Bureau of Labor Statistics reports on the average level of prices when it releases the Consumer Price Index (CPI).
What is an
Individual Retirement Account (IRA)
Funds set aside in a specific investment category with certain incentives to save for retirement.
What is an
Individual Retirement Account (IRA) - Roth
Contributions are not tax deductible, but qualified distributions are tax free – qualified distributions have to meet the following requirements; 5 years after the opening of the account and over the age of 59 ½, disabled, withdrawing to purchase a first home ($10,000 limit) or deceased. (The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.) /insights/monthly-newsletters/leave-them-a-legacy-not-taxes-with-a-roth-ira-conversion/
What is an
Individual Retirement Account (IRA) - Traditional
Contributions are tax deductible, but distributions are taxed as the individual’s income tax rate.
What is
Irreplaceable Capital
Money that must be preserved as much as possible because it will mean a change in lifestyle if that asset is diminished.
What is an
Irrevocable Trust
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.


What is a
J Curve
The theory that the rate of return on a fund will be low in its early stages, while the fund is set up, but as the firm becomes more stable, the return will increase. Graphed over a period of time, this progress looks like the letter J.
What are
Organizations that create employment, often boosting the economy in a certain region, usually a large corporation.


What are
Key Employees
Employees that a business owner or manager can’t live without. These employees should be a priority investment in any business of any size, and are often given some form of profit-sharing or equity to help with staff retention.
What is a
Key Performance Indicator (KPI)
Vital indicators of a stakeholder’s or firm’s quality of work. Sales quotas, profit margins, social media followers and several other benchmarks are examples of KPIs.


What is
Life Insurance
Insurance coverage that pays a death benefit to beneficiaries. There are two major types: term, which covers a certain amount of years (a “term”) and has low premiums, or permanent, which offers a permanent death benefit and has slightly higher premiums.
What is a
Living Trust
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.
What is a
Living Will
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.
What is
Long-Term Care
The medical support often needed later in life. Long-term care insurance is an important part of any retirement plan. The costs can be substantial and are not covered by Medicare.
What is
Quite simply, the number of years you will be alive. This is a major concern in retirement income planning, although it is – of course – impossible to predict exactly. Life expectancy has changed dramatically since Social Security started, so longevity is a factor in the retirement planning discussion. /insights/blog/living-long-life-cause-go-broke-strategies-make-money-last/


What is
The national health insurance program for Americans over 65 or younger people with some disabilities. Usually, Medicare participants need a supplemental insurance to fully cover themselves and their families.
What is the
MSCI All Country World Index EX USA
The MSCI All Country World Index ex USA captures the performance of securities within the MSCI All Country World Index except for equities within the USA. It is market cap-weighted and covers both developed and emerging markets.
What is the
MSCI EAFE Total Return Index
A stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada. ... The index is market-capitalization weighted (meaning that the weight of securities is based on their respective market capitalizations).
What is the
MSCI Emerging Markets Index
The MSCI EM (Emerging Markets) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of the Americas, Europe, the Middle East, Africa and Asia. The MSCI EM Index consists of the following emerging market country indices: Brazil, Chile, Colombia, Mexico, Peru, Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey, United Arab Emirates, China, India, Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand.


What is the
National Association of Securities Dealers Automated Quotations (NASDAQ)
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
What is
Net Unrealized Appreciation (NUA)
Appreciation on company stock over time. The IRS has made provisions for this appreciation to be taxed under capital gains and not regular income in certain circumstances. Getting this more favorable tax treatment is called the NUA Strategy.
What is
Net Worth
The total value of an individual’s assets, securities, or property at the current market price.
What is the
New York Stock Exchange (NYSE)
A stock exchange located on Wall Street in New York City, NY.
What is the
NIKKEI 225 Average Index
The Nikkei 225 Average Index is a Japanese index that tracks the top 225 companies listed on the Tokyo Stock Exchange. It includes the most liquid Japanese stocks listed in the first section of the Tokyo Stock Exchange. It is price-weighted and yen-denominated.


What is
Open Enrollment
The time of year, usually in the Fall, when employees can re-enroll for benefits. It can be a time to re-tune your benefits to make sure you’re optimizing them. /insights/monthly-newsletters/september-monthly-newsletter-all-your-pencils-sharpened-a-financial-fine-tuning-for-autumn/


What is
Pattern Recognition
A financial behavioral bias describing our tendency to see patterns even if they aren’t there.
What is
Peanut Butter Philanthropy
Charitable giving that is, like peanut butter, spread too far and too thin to be very effective. The term is based on the “Peanut Butter Philanthropy” written by a Yahoo! Executive, and refers to any practice – giving, paying stakeholders or investing – that is spread too thin. /glossary/
What is
An information/identity theft technique using fraudulent emails and copy-cat websites to get you to reveal valuable personal information. “Phishers” often pose as well-known companies, sometimes using their logos and design. /insights/blog/identify-avoid-fraudulent-communications-phishing/
What is a
The combined investments of an individual investor or mutual fund. /insights/blog/heres-your-financial-planning-starter-pack/
What is
Portfolio Management
Creating a diverse portfolio of investment assets for a client with specific objectives and goals; and then managing that portfolio and making adjustments to asset allocation, investment mix or balancing risk against performance. /insights/blog/whats-wallet-powerful-portfolio-management-tool/
What is
Power of Attorney
A designated decision-maker chosen to make financial, healthcare, legal and other decisions on your behalf. A POA usually worked out with an attorney, and may be the same person for all areas of decision-making, but doesn’t have to be. /insights/blog/why-you-might-need-a-power-of-attorney/
What is
The legal process which reviews a will to see that it is valid and authentic. Also the legal process of distributing an estate for an individual who does not have a will in place. The process is costly and time-consuming and is a good reason to put an estate plan in place. /insights/news/4-ways-to-improve-your-estate-plan/
What is a
Probate Court
The lengthy and often expensive process of distributing a person’s estate through the court systems. Records are public. One major motivation for solid estate and legacy planning is to avoid probate. /insights/blog/how-to-use-a-trust-as-a-financial-planning-tool/


What is a
Qualified Charitable Distribution
A donation to a recognized charitable organization (such as a nonprofit or church) that does not become part of your tax footprint for the year. The money, such as an RMD from your IRA, goes directly to the charity and reduces your tax liability.
What are
Qualified Investments
Retirement accounts that have tax advantages when money is deposited. Contributions are reduced from taxes in the year they are made, earnings aren’t taxed until withdrawal and participants can delay taxes until they have to start taking Required Minimum Distributions (RMD). Non-qualified investments do not receive the tax advantage.


What is
A strategy done with your advisor in which you take assets that are above your target percentage and buy what you need using the funds you receive from selling what you have too much of.
What is a
Registered Investment Advisor (RIA)
A firm that provides advice and acts on behalf of his or her client and has a fiduciary duty to do what is in the best interest of their client.
What is a
Registered Representative
An individual who is licensed by the Securities and Exchange Commission and has the authority to trade investment products on behalf of a client.
What is a
Required Minimum Distribution (RMD)
Required withdrawals from tax-advantaged retirement accounts. These required withdrawals usually begin at age 70 ½, though the rules differ based on account type, marital status, inherited accounts and more.
What is a
Reverse Mortgage
A loan that a homeowner can take out against the equity in their home after age 62. The owner can receive the funds as a lump sum, monthly payment or a line of credit.
What is a
Revocable Trust
A trust that can be altered or canceled by its grantor. During the life of the trust, any income earned is distributed to the grantor; upon the grantor’s death, the contents of the trust are transferred to its beneficiaries according to the terms of the trust.
What is a
An online advisory program used to manage wealth. Does not provide the holistic and outside-the-box thinking that human advisory support offers.
What is a
Roth IRA Conversion
Working with a financial advisor to “convert” funds from a traditional IRA to a Roth. The conversion can only be done once a year, and there are taxes at the time, but it puts you into a Roth which is tax-advantaged. /insights/monthly-newsletters/leave-them-a-legacy-not-taxes-with-a-roth-ira-conversion/


What is
An act of congress passed on December 15, 2019, an acronym that stands for “Setting Every Community Up for Retirement Enhancement.” Notably for personal finance the act ends the “stretch IRA” strategy and establishes a tax-generating provision that would require most beneficiaries to distribute the account over a 10-year period.
What is
Securities & Exchange Commission (SEC)
The main regulatory body regulating the securities industry.
What is
Social Security
The massive financial support program in the US designed to support those of retirement age and people with disabilities. Social Security is collected through payroll taxes.
What is
Social Security “Tax Torpedo”
When you are unprepared for a bump up to another tax bracket, which often results from Required Minimum Distributions and Social Security income arriving at once.
What is
Standard & Poor’s 500 Index (S&P 500)
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
What is
An investment security that signifies a fractional ownership of a company and have a claim on the assets and earnings of that company, stock investing involves risk including loss of principal.
What is
The art and science of choosing the right investments for a portfolio.


What is the
Tax Cuts and Jobs Act (TCJA)
The largest tax reform in thirty years, spear-headed by President Donald Trump in 2017. It changed tax brackets and brought up the minimum standard deduction significantly. It also made provisions for business owners, such as the 199a deduction.
What is
True Wealth
What is a
A fiduciary relationship where one individual (trustor) gives another (trustee) the right to hold an asset on behalf of a third-party or beneficiary for a given amount of time
What is a
Testamentary Trust
A trust that is created through the will of a deceased person.
What is a
An individual, corporation, or other entity that manages property held in a trust.


What is a
Unified Tax Credit
A federal tax credit that allows people to gift a certain amount without having to pay the gift, estate and generation-skipping transfer tax. Part of a comprehensive tax planning strategy.
What is
Universal Life Insurance
Life insurance policies that provide a permanent death benefit with different premium schedules. /insights/blog/win-the-game-of-life-insurance/


What is
The process of figuring the true value of an asset, stock, firm or company, often done before a sale or succession of ownership.
What is
The frequency at which a security or index moves, typically the more volatile the security the higher risk.


What is a
Wealth Advisor
A team of professionals responsible for helping clients pursue their goals; the team might include estate planning, tax planning and risk-management.
What is
Wealth Management
What is
Wealth Shame
The feeling of alienation or shame that comes from being more financially successful than previous generations of your family or culture of origin.
What is a
A legal document outlining how an individual would like their property and assets distributed upon their death.


What is
Currencies that trade in non-native markets or are housed in foreign banks.
What is an
The horizontal line on a graph. Often when charting fund performances, the x-axis indicates time, where the y-axis indicates performance. /insights/blog/what-is-the-yield-curve-and-what-does-it-tell-us/


What is
Year-End Tax Planning
Evaluating the previous year’s tax situation and planning for next year. A time to look at itemized versus standard deduction, expected income, 401(k) contributions, charitable giving and other financial issues and events.
What is a
The percent return on an individual security, typically expressed as an annual number and subject to change.
What is a
Yield Curve
The visual representation of interest rates and different maturities of fixed income securities.
What is the
The vertical line on a graph. Often when charting fund performances, the y-axis indicates performance, where the x-axis indicates time /insights/blog/what-is-the-yield-curve-and-what-does-it-tell-us/


What is a
Zero-bound Interest Rate
A monetary policy process in which central banks incrementally reduce the nominal rate of interest to 0%. It is usually used in an economic downturn to stimulate financial activity.
What is a
Zero Curve
A yield curve that shows no significant changes in short-term or long-term bonds. It’s often a sign of economic transition. /insights/blog/what-is-the-yield-curve-and-what-does-it-tell-us/

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