Glossary
Plain-language definitions of the terms used across CalcBeam calculators and guides.
APR
Annual Percentage Rate: the yearly cost of borrowing including most fees, expressed as a percentage. Better than the interest rate alone for comparing loans.
APY
Annual Percentage Yield: what a deposit earns in a year with compounding included.
Amortization
Paying off a loan through regular payments that cover interest first, then principal.
Annuity
A series of equal payments at regular intervals, such as a pension or loan payments.
Basis point
One hundredth of a percentage point: 100 basis points = 1%.
Bear market
A prolonged period of falling prices, usually 20%+ down from highs.
BMI
Body Mass Index: weight(kg) divided by height(m) squared; a screening measure, not a diagnosis.
BMR
Basal Metabolic Rate: calories your body burns at complete rest.
Bond
A loan you give to a government or company, repaid with interest.
Bull market
A prolonged period of rising prices.
CAGR
Compound Annual Growth Rate: the steady yearly rate that turns a start value into an end value.
Capital gains
Profit from selling an asset for more than you paid.
Churn
The rate at which customers stop using a service.
Compound interest
Interest calculated on the growing balance, so gains earn their own gains.
DCF
Discounted Cash Flow: valuing an asset by the present value of its future cash flows.
Depreciation
The loss of an asset's value over time, or its accounting allocation.
Diversification
Spreading investments to reduce risk.
Dividend
A company's cash payment to shareholders.
DTI
Debt-to-Income ratio: monthly debt payments divided by gross monthly income.
EMI
Equated Monthly Installment: the fixed monthly loan payment.
Equity
Ownership value: assets minus debts.
ETF
Exchange-Traded Fund: a basket of securities traded like a stock.
Futures
Contracts to buy or sell an asset at a set future price.
Gross margin
Revenue minus cost of goods sold, as a percentage of revenue.
Hedge
An investment that offsets risk in another.
Inflation
The general rise of prices over time, eroding purchasing power.
Interest
The cost of borrowing money, or earnings on deposits.
IRA
Individual Retirement Account: a US tax-advantaged retirement account.
IRR
Internal Rate of Return: the discount rate that makes an investment's NPV zero.
Leverage
Using borrowed money to amplify investment exposure and risk.
Liquidity
How quickly an asset can be turned into cash without moving its price.
LTV
Loan-to-Value ratio: loan amount divided by asset value.
Market cap
Share price times shares outstanding: a company's total market value.
Mortgage
A loan secured against property.
Mutual fund
A pooled investment fund priced once daily.
NPV
Net Present Value: future cash flows discounted to today, minus the investment.
Options
Contracts giving the right, not obligation, to buy or sell at a set price.
P/E ratio
Price-to-Earnings: share price divided by earnings per share.
PMI
Private Mortgage Insurance: protects the lender when down payment is under 20%.
Portfolio
The full set of investments someone holds.
Principal
The original sum borrowed or invested, before interest.
ROI
Return on Investment: profit divided by cost.
SIP
Systematic Investment Plan: regular fixed investments, common in India.
Stock
A share of ownership in a company.
TDEE
Total Daily Energy Expenditure: calories burned per day including activity.
Volatility
How much prices swing; a measure of risk.
WACC
Weighted Average Cost of Capital: a company's blended financing cost.
Yield
Income from an investment as a percentage of its price.
Zakat
Obligatory alms in Islam, typically 2.5% of qualifying wealth.
Accrued interest
Interest that has built up on a loan or bond but has not been paid or received yet. On a loan it grows daily between payments; on a bond, a buyer compensates the seller for interest earned since the last coupon. It explains why payoff amounts and bond prices rarely look like round numbers.
Asset allocation
How you divide investments among categories like stocks, bonds and cash. It is the biggest driver of a portfolio's risk and return, mattering more than picking individual securities. A common starting point is holding roughly 110 minus your age as a percentage in stocks.
Balance transfer
Moving debt from one credit card to another, usually to get a low or zero percent introductory rate. It can save large interest costs if you pay the balance off before the promo ends. Watch for transfer fees, typically 3 to 5 percent, which eat into the savings.
Blue-chip stock
Shares of a large, well-established company with a long record of stable earnings and dividends. The term comes from the highest-value chips in poker. They are considered steadier than smaller stocks but still carry market risk.
Cash drag
The performance penalty from holding uninvested cash in a portfolio during rising markets. Cash earns little while stocks climb, so a large cash cushion lowers long-term returns. Keeping an emergency fund is still wise; cash drag refers to excess idle money beyond that.
Cost basis
The original price you paid for an investment, adjusted for splits, dividends reinvested and fees. It determines your taxable gain or loss when you sell: sale price minus cost basis. Keeping accurate records across years saves real money at tax time.
Credit utilization ratio
The share of your available credit that you are currently using, calculated per card and across all cards. A $2,000 balance on a $10,000 limit is 20 percent utilization. Keeping it under 30 percent, ideally under 10 percent, is one of the fastest ways to lift a credit score.
Dollar-cost averaging
Investing a fixed amount on a regular schedule regardless of market prices. It automatically buys more shares when prices are low and fewer when high, removing timing decisions. It usually trails lump-sum investing in rising markets but is far easier to stick with emotionally.
Emergency fund
Cash savings set aside for true surprises like job loss or major repairs, typically 3 to 6 months of essential expenses. It lives in a high-yield savings account, not investments, so it is there when markets are down. Its job is preventing debt, not earning returns.
Expense ratio
The annual fee a mutual fund or ETF charges, expressed as a percentage of assets. A 1 percent ratio costs $10 a year per $1,000 invested, compounding into a large drag over decades. Low-cost index funds often charge under 0.1 percent.
Fixed income
Investments that pay regular, predictable returns, mainly bonds and certificates of deposit. They are generally steadier than stocks but offer lower long-term growth. Retirees and cautious investors use them to stabilize portfolios and fund near-term spending.
Market timing
Trying to buy before rallies and sell before drops by predicting market moves. Decades of evidence show even professionals fail at it consistently, and missing just the few best days devastates long-term returns. Regular investing through ups and downs beats timing for nearly everyone.
Principal-only payment
An extra loan payment applied entirely to the loan balance rather than split between interest and principal. You must usually instruct your lender explicitly, or the extra may just prepay future bills. Principal-only payments are the mechanism behind all prepayment interest savings.
Rebalancing
Periodically buying and selling to restore your portfolio to its target mix, for example back to 80 percent stocks and 20 percent bonds. It forces a sell-high, buy-low discipline automatically. Most investors rebalance once a year or when allocations drift several points off target.