Glossary

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Recession

A recession is a period of significant decline in economic activity. Although the exact definition varies, many experts consider a recession to be two consecutive quarters of decline in gross domestic product (GDP). As such, the market may experience major plunges and volatility over several months.

Roth IRA

A Roth IRA is a type of individual retirement account. When you have a Roth IRA, you contribute after-tax dollars — up to a certain limit every year. That money stays in your retirement investment account and can potentially earn investment returns as you work your way toward retirement.

Retained earnings

Retained earnings are the money that a business holds onto after the process of shareholder distributions. Retained earnings are important because they can fuel business stability and growth. Without retained earnings, the business may not have the funds it needs to invest in the future.

Required minimum distributions (RMDs)

RMDs are an annual amount retirees are required to withdraw from their tax-deferred accounts after reaching a certain age.

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Recent Terms

Stagflation

Stagflation is an especially difficult economic environment created by the combination of several factors: slow economic growth, high inflation, and a high unemployment rate.

Exchange-traded fund (ETF)

An exchange-traded fund (ETF) is a type of investment fund that holds a variety of underlying securities, including stocks, bonds, or alternative assets. It’s a way for investors to pool their money and each gain exposure to the assets within the fund rather than purchasing each asset individually.

SEP IRA

A SEP IRA — short for simplified employee pension plan — is a tax-advantaged retirement plan designed for business owners. While it can be used by businesses of any size, it’s often used by small business owners and self-employed individuals.