Tax Rate The percentage rate that is charged on income as income tax. Tax rates increase as income increases, making income taxes a “Progressive Tax”. Related Lessons

Tax Preparation Software A type of software that exists to help people prepare and file their income taxes at the end of each tax year. Tax prep software are a popular alternative to using the services of a professional accountant while still having a high level of guidance on what tax credits or deductions exist Read More…

Tax Deductions An incentive provided by governments to encourage certain behaviors in exchange for reduction in their taxable income, and thus the total tax that must be paid. Unlike a tax credit, tax deductions can only reduce your tax owed to 0 – it cannot be refunded as cash if your total tax owed would Read More…

Tax Credit A tax credit reduces the tax you owe, dollar for dollar. A tax deduction only reduces the income you are taxed on, so it cuts your bill by less. Some credits are refundable: after tax hits zero, leftover is paid out. A nonrefundable credit stops at zero. The U.S. Earned Income Tax Credit Read More…

Tastes And Preferences The individual attributes of a person that dictate style, fashion, and what a person likes or dislikes. Tastes and preferences can change over time – a product that is very popular one year can be found unpopular the next year due to a general change in consumer’s tastes and preferences.

Target Markets A target market is the group of customers a company chooses to serve, the buyers most likely to want the product. Marketers sort possible buyers by shared traits such as age, income, location, lifestyle, or buying behavior, then select the group to pursue. Product, price, and promotion are built for that group, so Read More…

Trade Execution The act of an order placed by an investor being sent to market, a pairing trader found, and the exchange of securities for cash taking place.

Tangible Wealth A type of wealth expressed in money, physical assets, or property. Tangible wealth can be seen or touched and converted (if necessary) into cash and spent.

Systemic Risk The threat of a problem arising from an entire system, rather than one specific part of that system. Systemic risks are typically very expensive to correct – but catastrophic if they are realized.

Symmetrical Triangle A technical analysis pattern where support lines are increasing, and resistance lines are decreasing at the same rate. A symmetrical triangle implies that the price is about to have a strong change in one direction or the other but does not give any indication of which direction. Related Lessons

SWOT Analysis A SWOT analysis sorts a business or project into strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are inside the organization, such as a strong brand or limited cash. Opportunities and threats are outside it, such as a growing market or a new competitor. Teams fill in the four boxes before they choose Read More…

Swing Trading A short-term investing strategy that holds stocks usually for less than 1 week. Swing traders rely on market sentiment and attitudes around a particular stock but try not to get too invested in up-to-the-second technical analysis charts. Click Here for our lesson on Building an Investing Strategy

Surplus The quantity supplied exceeds the quantity demanded.

Support Lines A technical analysis term that looks for a trend in the minimum prices a stock falls to before the price starts to rise again. Day traders will often try to buy shares with prices near the support line in the expectation that the price is about to increase. Related Lessons

Supply An economic concept describing the relationship between market price and how much of a product will be produced and put for sale by businesses.

Supplemental Nutrition Assistance Program (SNAP) A federal program that provides funding for food for needy families. SNAP benefits used to be on stamps distributed to families who qualify, and so it is sometimes called “Food Stamps”.

Supplemental Health Insurance A type of secondary health insurance used to pay for smaller costs incurred before primary health insurance kicks in. This would include things like deductible and co-pay fees. Supplemental health insurance is usually inexpensive but has very low limits on what it will pay out. Click Here for our lesson on Health Read More…

Subsidy An amount of money provided by the government to help pay for some good or service. Subsidies are used to fund projects that provide some public good but are too expensive under free market conditions.

Students Loans A type of loan taken out by a student to finance their education. Student loans are often subsidized by the government, and the borrower only starts to make payments after they begin work after finishing school. Click Here for our lesson on Student Loans

Structural Unemployment A type of unemployment caused just by the fact that there is sometimes time between when someone leaves one job and starts another job. Structural unemployment is considered unavoidable – which is why an unemployment rate around 3% is still considered “Full Employment”. Click Here for our lesson on Unemployment

Strike Price A dollar value on an options contract that specifies the price for which it can be exchanged for the underlying stock. For example, a “call” option with a strike price of $10 could be executed to buy that underlying stock for $10, no matter what the current market price is. Click Here for Read More…

Strategic Planning A management activity that sets long-term goals for a company for how they believe it should be positioned (between products offerings, staff, and organizational goals) at some point in the future. The activities of the company should be aligned with this strategic plan, rather than unfocused activities that may be pulling in different Read More…

Stored Value The value represented by money. For example, “one dollar” can be exchange for any number of goods, with most people having a strong idea of what value that represents. Click Here for our lesson on What is Money?

Stop Order An order type that is used to protect against loss. With a buy-stop order, the order would execute if the stock’s price went above the stop price. With a sell-stop order, the order would execute if the stock’s price fell below the stop price. Click Here for our tutorial video on Order Types

Stock Split The act of a company dividing (or merging) shares of its stock. A stock split has no impact on the shareholder’s equity. One reason a company may issue a stock split is because the stock’s price has increased to a point where investors may have a hard time purchasing just one share, so Read More…

Stock Screener A tool used by an investor to filter down stocks by specific criteria that they are looking for in their portfolio and compare several stocks that meet those criteria. For example, a stock screener can filter down stocks from a specific sector, worth more than $10 billion dollars, and have at least a Read More…

Stock Options A contract that gives the buyer the right, but not obligation, to buy a stock at a specific price at any time before the specified expiration date. Click Here for the Investing101 Chapter on an Introduction to Options (30 min)

Stock Market Crash Of 1929 An event in the fall of 1929 when the stock prices on the New York Stock Exchange rapidly fell over a short time – losing nearly 25% of its value in just 2 days. There were many causes of the initial panic, but as prices started to fall it caused Read More…

Stock Market See “Stock Exchange”. Related Lessons

Stock Index A number that represents the combined value of several (usually dozens or hundreds) of stocks in a stock market’s prices. A stock index is used to measure how much the market as a whole is rising or falling. The S&P 500 is the most widely cited stock index. Related Lessons

Stock Exchange An organized place of exchange where investors buy and sell stock in publicly traded companies. Stock exchanges are very highly regulated to ensure investors have equal information and trading occurs under fair conditions. Related Lessons

Stock Crash A situation where investors broadly lose confidence in stock prices and try to sell all at once, causing the prices across an entire stock market to rapidly fall over a short period of time. This can be triggered by poor broad economic news, or a short-term panic by investors. Related Lessons

Stock A certificate that entitles its owner to a percentage of ownership of a business, including all assets and profits. Stocks are typically traded between investors on Stock Exchanges. Click Here for our lesson on Stocks

State Income Tax The income tax levied in the United States by individual states. Not all states have an income tax, and instead fund their government through sales taxes or taxes on natural resource extraction. Related Lessons

Standard Deduction An amount defined in law in the United States that can be subtracted from a person or household’s total income before taxes are applied. Households can also choose to instead use an Itemized Deduction, where they list out specific tax-except purchases they may have made during the year, but the Standard Deduction is Read More…

Spreads Spreads refer to the action of placing two or more option trades at the same time on the same underlying security, seeking to profit off of the changes in that underlying security’s price under different scenarios. Some spreads even maximize profit if the stock’s price does not move at all. Click Here for the Read More…

Spending Shock An unexpected event that requires a person to spend money that was considerably outside their budget or spending plan and must rely on tapping into emergency funds or credit cards to pay for.

Spending Plan A document created by a person that outlines all of the spending that will be done over the course of a month (or longer) and compares against expected income. Spending plans are usually based on previous spending to make them more realistic.

Speculation The act of buying securities in the hope that the price will rise quickly to be re-sold for a large short-term profit. Speculation in investing is a major source of price instability.

Specialty Goods Types of goods that serve a small niche market, rather than having broad appeal. Specialty goods are typically more expensive and/or custom made.

Specialization An economic concept where persons, markets, or entire countries invest more resources into becoming very good at making certain types of goods and services and trading the surplus with other persons or countries that are good at something else. By specializing, efficiency is increased, and by trading both parties to the trade have greater Read More…

SOX Act A financial regulation law in the United States that imposed stricter financial reporting requirements and independent auditing of accounting information in the United States to protect investors in publicly traded companies from internal fraud (i.e., dishonest activities by the company’s own management or accounting teams).

Solvency Solvency is the ability of a business or government to meet its debts, including debts that come due over many years. A solvent organization can cover what it owes. An insolvent one cannot, and may be pushed into bankruptcy. A business can hold cash this month and still be insolvent if its debts are Read More…

Sole Proprietorship A type of business entirely owned by a single person.

Social Security Number A person’s unique identification number in the United States. Social Security Numbers were first used solely for identification for Social Security benefits but have since expanded to be used as an identifier for practically all federal services. Click Here for our lesson on Income Tax Filing and the Form 1040

Social Security A public pension system in the United States, which pays benefits both to retired persons and those with disabilities that prevents them from working. Social Security is funded by a payroll tax. Related Lessons:

Social Responsibility The concept that a business has a duty to society at large to act in a fashion that promotes equity, environmental responsibility, and fairness. Social Responsibility is the opposite of the Profit Maximization philosophy, where a business’s only objectives are to maximize profit for their shareholders.

SMART Goals SMART goals are Specific, Measurable, Achievable, Relevant, and Time-bound. “Get better at coding” is vague. “Complete an online Python certificate by December and build one portfolio project” is a SMART goal. The framework turns a wish into a plan you can check. Individuals use it for a 3-to-5-year pathway. Using SMART goals ensures Read More…

Small-Cap A publicly traded company with a total value of stock less than $1 billion.

Skilled Labor A person or group of people that has some specialized skill or abilities that makes them uncommon in the job market, and unable to be replaced with any other random person off the street. Most jobs are considered “skilled” in some way and require some prerequisite education or training.

Simple Will A basic will that outlines how a person’s assets should be distributed to survivors in the event of death. Ideally a simple will should also include provisions for how any outstanding debts should be repaid. Click Here for our lesson on Simple and Living Wills

Shortage The quantity demanded exceeds the quantity supplied.

Short-Term Investments Investments that are purchased with the intention to sell after a period of less than one year.

Short Term Gains The increase in the value of an investment over a period of less than one year. Short-term gains are typically taxed at a higher rate than long-term gains.

Short Squeeze A coordinated financial maneuver by a group of investors that identifies a stock that is currently heavily short-sold by large investors, and purposefully buying up shares of this stock to drive up the stock’s price. This forces the large short-selling investors to experience large losses – and forces them to buy back shares Read More…

Short Sell The act of borrowing a share of stock, immediately selling it, then buying it back later to return it to the person or business it was borrowed from. This allows the investor to profit from a decrease in the stock’s value – they need to pay back a stock at a cheaper price Read More…

Short Sales (Real Estate) The act of a home owner (or bank repossessing the home if the borrower stopped paying) selling a home for less than is currently owed on a mortgage. Short sales are not preferred by anyone involved and are usually only done if it is not possible to sell the home for Read More…

Sharpe Ratio A risk-adjusted measurement of a portfolio’s performance. High Sharpe Ratios both have strong returns, but also consistent returns (few highs or lows – just a consistent growth in value).

Shares Outstanding The total number of shares of stock that are currently circulated between investors of a company. This can increase if the company issues more stock or decrease if the company buys back its own stock.

Shares The number of stock certificates issued by a company, sold to raise capital to fund the expansion of the business.

Shareholder’s Equity The total value of a business as measured in its financial statements. Shareholder’s Equity is the total assets minus the total liabilities.

Shareholders The persons or businesses who own stock in a corporation. These are the legal owners of the corporation itself.

Settlement A concept where a lawsuit is “settled” between the parties involved before it goes to court to be decided by a judge or jury. Settlements are cheaper than court-mandated resolutions and can include confidentiality or no-fault provisions of the settlement agreement (so the person or company being sued can pay out the settlement without Read More…

Series 7 A financial exam required by investment professionals to be licensed to buy and sell stocks and is a prerequisite to be licensed to work at a brokerage firm.

Series 6 A financial exam required by investment professionals to be licensed to buy and sell certain types of investment products and time series contracts.

Self-Selection Problem A concept in insurance where the people who are most likely to require large insurance pay-outs are the ones most likely to buy insurance. This drives up the price of insurance (since the price of a policy is based on the average amount the insurance company will need to pay to cover costs), Read More…

Security Type Diversification An investment concept where an investor spreads their investments across multiple security types to protect against swings in overall financial markets. Click Here for our lesson on Building a Diversified Portfolio

Security Type The type of investment of a paper asset. Stocks, bonds, and mutual funds are different security types. Related Lessons

Securities A type of investment made in a paper asset, like a stock, bond, mutual fund, future contract, or option contract. Related Lessons

Secured Loan A type of loan that has some type of collateral that the creditor can repossess if the borrower stops paying the loan. Secured loans typically have lower interest rates than unsecured loans. Car loans and mortgages are types of secured loans. Related Lessons

Sector Diversification An investing concept where an investor would want to spread their portfolio across multiple economic sectors to minimize risk of one sector losing value, while being able to capture gains in value across a wider range. Click Here for our lesson on Building a Diversified Portfolio

Sector A division of the economy of businesses that engage in roughly similar types of activities. Sectors include agriculture, healthcare, heavy industry, and others.

Section 8 A federal housing subsidy program that offers market-rate rent vouchers for low-income families. “Section 8” vouchers allow rents to be paid to private landlords.

SECA The Self-Employed Contributions Act is a law that requires self-employed people to report their income (and pay income taxes) to the federal government. Click Here for our lesson on Income Tax Filing and the Form 1040

SEC The Securities and Exchange Commission – the primary regulatory body in the United States that regulates financial markets and imposes reporting requirements and disclosure rules for publicly traded companies. The SEC oversees U.S. markets for stocks, bonds, and other securities, and the companies that sell them to the public. Public companies publish financial reports Read More…

Seasonal Unemployment Periods of unemployment experienced by certain professions during certain times of the year. For example, many farm laborers or theme park workers will become unemployed during the winter months. Click Here for our lesson on Unemployment

Scientific Management An approach to management pioneered by Fredrick Taylor that analyzes workflows in order to improve efficiency. A scientific manager would be interested in how much time it takes for a worker to accomplish some specific task, or points where miscommunication take place to identify areas of improvement in the workflows of the company Read More…

Scarcity Scarcity, in economics, means wants exceed available resources, so every choice has a cost and nothing is truly free. Marketers use that same idea as a persuasion tactic: people want what seems rare because they fear losing access. “Only 2 left” and midnight deadlines are scarcity cues. Real limits are economic scarcity. Artificial scarcity Read More…

Savings Account A type of bank account used for long-term savings of cash. Banks use savings account deposits to fund loans they issue to people and businesses and pay the savers interest on their savings. Savings accounts do have a return on investment, but it is much lower than most other investment vehicles. Click Here Read More…

Sallie Mae The largest providers of student loans in the United States. Sallie Mae was originally created as a government entity but was privatized and now is a publicly traded company. Click Here for our lesson on Student Loans

Sales Tax A tax levied on the sale of all finished goods and/or services. Sales taxes make up an important component of government revenues, and can vary significantly by city, state, and country, and even on different types of products. Click Here for our lesson on Sales Tax

Sales Strategy The general approach of a person or business to present products or services to potential customers in a way that is likely to encourage that customer to make a purchase. This can include what types of customers to pursue, specific “pitches” of how to present the product, or discussions on pricing to make Read More…

Safe Deposit Box A physical box located in a bank’s vault that is rented by individuals or business to save crucial physical documents or objects in a secure location.

S&P 500 A stock index of 500 of the largest securities on the New York Stock Exchange from a wide range of economic sectors, frequently used as a gauge for the performance of the stock market as a whole. Related Lessons

Running A Surplus The status of a government to currently have more revenues than expenses. This allows the government to bring some of today’s revenues forward to the next year.

Routing Number A number that appears on a check that refers to a specific bank. Checks will include both a routing number (referring to the bank of the person who writes the check) and an account number (the specific bank account from which the check is paying).

Roundtrip Transfer A deceptive action of a business to funnel transactions between different parts of a business or its subsidiaries in order to show higher total revenues in a given period, and make the company look like it has greater revenues than it actually does.

Roth IRA A Roth individual retirement account (Roth IRA) is a type of retirement fund in the United States where the retiree pays the full income tax on their income when they earn it and deposit it into the account but pay no income tax on the growth on their investments when they withdraw it Read More…

Risk Aversion An economic concept that observes that given two options with the same expected value, the average person will usually take the least-risky route. For example, when most people are offered $20 in cash, or a coin flip with $40 if it is heads, they will take the sure bet of $20.

Risk Appetite The individual preference of an investor for their balance between risk and reward. Conservative investors usually prefer lower risk and lower rewards, aggressive investors prefer higher potentials for reward and are willing to take bigger risks to get it.

Risk The chance of loss in an endeavor. Investments with the highest possible payoff also tend to have higher risks in something going wrong and experiencing a loss.

Right To Complain A fundamental implied right in countries with Freedom of Speech that says that a customer always has the right to publicly complain about a service or product provided by a company, so long as their complaints are factual.

Reverse Mortgage A type of investment typically offered to the elderly, where a homeowner can take a loan out against the value of their home without making monthly payments to repay the loan. The loan balance increases every month based on the loan’s interest rate and is only paid back in one lump sum after Read More…

Revenues Cash and other income brought in by a business over a specific period of time.

Return On Investment Return on investment (ROI) is the gain from a choice divided by the money you put into it. A $200 investment that returns $800 has a higher ROI than a $2,000 investment that returns the same $800. An investor uses ROI to choose where savings go, such as into a stock or Read More…

Return On Equity Return on Equity, or ROE, is a profitability measurement that divides the total profit made by a business by the total shareholder’s equity in the business. The formula is Net Income / Shareholder’s Equity.

Retirement Savings Contribution Credit A tax credit that applies to specific retirement savings accounts (like IRA or 401(k) accounts) that offers a rebate to a percentage of retirement contributions made that year. This tax credit increases with lower incomes and exists to encourage people with lower total earnings from still making contributions to their retirement Read More…

Retirement The act of a person formally ending their working career, living of savings, pensions, and investments going forward. Most people hope to have a comfortable retirement, where they can maintain a standard of living at the same or similar level that they had while working.

Retained Earnings The total profit of a business that is not re-invested or paid out to investors as dividends. This is profit that the company carries forward to the next quarter or year.

Resume A single document that summarizes a person’s education and previous job experience, to be shared with a potential employer when applying for a new job.