… we have a small favor to ask. Thousands of people have placed their trust in the Racine County Eye’s high-impact journalism because we focus on solutions-based journalism.

With no shareholders or billionaire owners, we can provide trustworthy journalism that focuses on helping readers.

Unlike many others, Racine County Eye’s journalism is available for everyone to read, regardless of what they can afford to pay. We do this because we believe in information equality. Greater numbers of people can keep track of events, understand their impact on people and communities, and become inspired to take meaningful action.

If there were ever a time to join us, it is now. Every contribution, however big or small, powers our journalism and sustains our future. Support the Racine County Eye from as little as $5 – it only takes a minute. Thank you.

$
$
$

Your contribution is appreciated.

Listening to financial professionals can often feel like hearing a foreign language. The terms used and their perceived complexity keep many interested people standing on the sidelines – but these terms are usually a lot more straightforward than you think. Below, we’ve compiled a list of financial terms everyone should know. You’ll probably be vaguely familiar with most of them but don’t know what they truly mean and how they can impact your personal financial decisions. 

Net Worth

We’ve all heard this phrase referring to athletes or celebrities, but few know how it’s calculated and how to use it for their own financial benefit. Net worth is calculated by subtracting your liabilities from your assets. Include all bank accounts, investments, home values, and even vehicle values when calculating assets. All debt, including remaining mortgage balances, credit cards, or student loans, factor into your liabilities. By figuring out your net worth, you’ll get an overall picture of your financial health and can make changes to your goals accordingly.

Rebalancing

As personal investing continues to grow in popularity, more and more people manage their own portfolios without the help of professionals, and amateur investors can easily overlook asset allocation principles like diversification. Professional traders and amateurs alike should familiarize themselves with the rebalancing process to maintain their desired strategy. Rebalancing keeps asset allocation at your predetermined levels by buying or selling different investment vehicles. As markets swing, your allocation can quickly go haywire, so look to rebalance your portfolio at least twice a year.

Bonds

We’ve all heard the word, and have probably been gifted one at some point, but few know the details behind the transaction that takes place when purchasing a bond. When you buy a bond, you essentially become a lender, typically to the government, and there are corporate bonds, as well. You’ll receive periodic interest payments, and the full amount of the bond will be returned to you at maturity. Bonds continue to be viewed as one of the safest ways to invest, although the returns are typically smaller than other investment options.

Photo: PeopleImages via gettyimages.com

Compound Interest

Another term we’ve all heard but probably don’t fully understand is compound interest. The simplest way to view this is interest stacked on top of interest. When saving or investing, compound interest will help your money pile up faster. For example, you may receive interest for any deposits into an account that’s already accruing interest on the balance. Compound interest should also be looked at closely when dealing with debt. You may be paying interest at the outset of a loan, plus any added to the balance through the course of your loan. It truly is a double-edged sword.

Capital Gains

One of the most popular financial terms around tax season, capital gains, refers to the increase in an asset’s value compared to its original purchase price. Capital gains are not realized until you sell an investment, and the tax rate varies depending on how long you’ve been holding that asset. Long term capital gains refer to assets held for more than one year. These gains are taxed more favorably than regular income and short term gains. Any capital gains increase your tax liability, and capital losses lower them, so be sure to keep a detailed log of your trading if you’re going at it alone.

By increasing your understanding of the language of finance, you’ll be better equipped to put your money to work and start reaching your financial goals. Whether you’re trying to maximize your gains using compound interest or looking to lower your tax liability by holding onto an asset long term, expanding your knowledge will only help you make sound financial decisions. The further you dig, the more resources you’ll discover to enable your money to grow.

Finances FYI is presented by [sponsor]. [Insert 1-2 sentences ABOUT sponsor and CTA].

Additional Headlines:

  • Understanding‌ ‌Basic‌ ‌Financial ‌Terms‌ ‌
  • Financial ‌Terms‌ ‌You’ve‌ ‌Heard‌ ‌But‌ ‌Don’t‌ ‌Understand,‌ ‌Explained‌ ‌
  • Guide‌ ‌to‌ ‌Basic‌ ‌Financial‌ ‌Terms‌ ‌to‌ ‌Improve‌ ‌Your‌ ‌Financial‌ ‌Literacy‌ ‌
  • Understanding‌ ‌Finance:‌ ‌Five‌ ‌Basic‌ ‌Financial‌ ‌Terms‌ ‌You‌ ‌Should‌ ‌Know‌

Advertising disclosure
To support our site and content, we work with partners to present valuable offers to help you save, earn, and get ahead. We may be compensated for the purchase of goods and services made through the links in this offer program.
Offers for you
Curated offers for our readers
advertiser disclosure
CodeMonkey
Coding for kids! Introducing programming games for the next generation. Get your kids coding today.
Start with a free trial.
Start with a free trial.

Get your students coding in no time!

CodeMonkey is a fun and educational game-based environment where kids learn to code without any prior experience. After completing CodeMonkey's award-winning coding courses, kids will be able to navigate through the programming world with a sense of confidence and accomplishment.

Kids will love learning to code with CodeMonkey

  • Ready to Go Courses. With CodeMonkey’s teacher kit and support team, anyone can teach the basics of computer science.
  • Real Coding Languages. CodeMonkey's courses teach text-based coding so students learn to program like a real developer.
  • Game-Based Learning. Kids learn coding in an engaging and rewarding environment that utilizes gaming elements.

Free Trial - Enjoy a full-blown gaming experience that will teach your kids to code!