PERSONAL FINANCE

TEST-D

Defined Benefit Plan

• What Does Defined-Benefit Plan Mean?An employer-sponsored retirement plan where employee benefits are sorted out based on a formula using factors such as salary history and duration of employment. Investment risk and portfolio management are entirely under the control of the company. There are also restrictions on when and how you can withdraw these funds without penalties.

Also known as "qualified benefit plan" or "non-qualified benefit plan".

Defined Benefit Plan

• Investopedia explains Defined-Benefit PlanThis fund is different from many pension funds where payouts are somewhat dependent on the return of the invested funds. Therefore, employers will need to dip into the companies earnings in the event that the returns from the investments devoted to funding the employee's retirement result in a funding shortfall. The payouts made to retiring employees participating in defined-benefit plans are determined by more personalized factors, like length of employment.

Financial Planning

• financial Planning 101• Financial planning is one of the most important

topics you’ll ever learn. A bad financial plan can leave you homeless; a good plan can provide you and your family with a comfortable life

• But before you begin analyzing ways to invest and manage your money, make sure you understand the fundamental principles of financial planning. Mastering the principles will equip you for almost inevitable success — not doing so will make you a sitting duck.

Variable expense

• Variable expenses change depending on your consumption of a good or service. A variable expense is a cost that changes significantly from period to period, such as week to week, month to month, quarter to quarter or year to year. Typical household variable expenses are household maintenance expenses such as painting or yard care, general expenses such as clothing, groceries, and car maintenance and fuel, and utilities such as electricity, gas and water.

Fixed expense

• Fixed and variable expenses are the two main components of a company's total overhead expense. Fixed costs are those that do not fluctuate with changes in production activity level or sales volume, such as rent, insurance, dues and subscriptions, equipment leases, payments on loans, depreciation, management salaries, and advertising. Variable costs are those that respond directly and proportionately to changes in activity level or volume, such as raw materials, hourly wages and commissions, utilities, inventory, office supplies, and packaging, mailing, and shipping costs.

Budget variance

• Difference between the actual amount incurred or realized, and the corresponding forecasted (budgeted) figure.

• NYC—EXTRA COST OF SNOW STORM

• NYC EXTRA COST FOR SECURITY

EXCISE TAX

• An excise tax is a tax on use or consumption of certain products. Excise taxes are sometimes included in the price of a product, such as motor fuels, cigarettes, and alcohol. Excise taxes may also be imposed on some activities, like gambling. Excise taxes may be imposed by the federal government or by a state.

• The IRS has information on excise taxes imposed on individuals and businesses.

DEBIT CARD

• A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card

DEBIT CARD

• In many countries the use of debit cards has become so widespread that their volume of use has overtaken the cheque and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date.

DEBT RATIO

• Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as 'goodwill'). THE LOWER THE RATIO THE MORE SECURED THE CORP IS

CAPITAL GAINES

• Capital gains tax rates are determined by the type of investment asset and the holding period. In additional to the federal capital gains tax rates, your capital gains will also be subject to state income taxes. Most states do not have separate capital gains tax rates. Instead, most state will tax your capital gains as ordinary income subject to the state income taxes

CAPITAL GAINES

• A capital gains tax (CGT) is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

CAPITAL GAINES• Almost everything you own and use for personal purposes, pleasure

or investment is a capital asset.When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.

You may deduct capital losses only on investment property, not on property held for personal use.

Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.

• If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.

DISCRETIONARY INCOME

• The amount of an individual's income available for spending after the essentials (such as food, clothing, and shelter) have been taken care of.

What Does Discretionary Income Mean?

• What Does Discretionary Income Mean?The amount of an individual's income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid. Discretionary income includes money spent on luxury items, vacations and non-essential goods and services.  

Discretionary income is derived from disposable income, which equals gross income minus taxes.  

budget

• What Does Budget Mean?An estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about anything else that makes and spends money. A budget is a  microeconomic concept that shows the tradeoff made when one good is exchanged for another.

Investopedia explains Budget

• A surplus budget means profits are anticipated, while a balanced budget means that revenues are expected to equal expenses. A deficit budget means expenses will exceed revenues. Budgets are usually compiled and re-evaluated on a periodic basis. Adjustments are made to budgets based on the goals of the budgeting organization. In some cases, budget makers are happy to operate at a deficit, while in other cases, operating at a deficit is seen as financially irresponsible.

ROTH IRA• An individual retirement plan that bears many similarities to the

traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Similar to other retirement plan accounts, non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal.

• • Investopedia explains Roth IRA

A qualified distribution is one that is taken at least five years after the taxpayer establishes his or her first Roth IRA and when he or she is age 59.5, disabled, using the withdrawal to purchase a first home (limit $10,000), or deceased (in which case the beneficiary collects). Since qualified distributions from a Roth IRA are always tax free, some argue that a Roth IRA may be more advantageous than a Traditional IRA.

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MARGINE

• . The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account.

• Buying with borrowed money can be extremely risky because both gains and losses are amplified. That is, while the potential for greater profit exists, this comes at a hefty price – the potential for greater losses. Margin also subjects the investor to a number of unique risks such as interest payments for use of the borrowed money. INVESTOR BORROWS UP TO 50%

US TRESARY BILL

• A negotiable debt obligation issued by the U.S. government and backed by its full faith and credit, having a maturity of one year or less. U.S. Treasury Bills are exempt from state and local taxes.