Glossary

The period of the trailing 12 months.

The annualized return for the trailing 36 months.

A company’s retirement benefit plan that allows employees to make regular, tax-deferred contributions from their salaries each pay period. Companies may match a portion of the employee’s contributions.

A plan similar to a 401(k) plan, but offered to public employees and people who work for nonprofit organizations.

Interest that has been earned since the last coupon payment, but has not been paid to the owner of the bond because the next payment is not yet due. If the bond owner sells the bond in advance of receiving the next payment, the accrued interest is assessed at the time of the sale.

This is the bottom-line on which federal income tax is computed. It’s computed by subtracting certain expenses and other allowable adjustments (ex. contributions to IRAs) from gross income.

Funds paid to an ex-spouse as required by a legally binding separation agreement or divorce decree. Alimony is taxable income to the partner who receives it.

A US Dollar denominated security issued by a U.S. bank in place of the foreign non-dollar shares held in trust by that bank, thereby allowing the trading of foreign shares in U.S. markets.

A type of investment contract in which investors, as policyholders, make payments to an insurance company. The money grows tax-deferred until you withdraw it at retirement. It earns interest and may also pays a death benefit.

What is actually owned (such as a home(s), car, jewelry and anything that has monetary value).

This is how an investment portfolio is apportioned. (Ex. a mix of international stocks, US stocks, large, mid size and small company stock, bonds, real assets, alternative investments and money market funds.)

A record of your assets, liabilities, and owners equity.

Mutual funds invested in a mix of stocks and bonds.

U.S. Aggregate index covers the USD-denominated, investment-grade, fixed-rate, taxable bond market of SEC-registered securities. The index includes government securities, mortgage-backed securities, asset-backed securities and corporate securities all with a maturity of greater than one year.

A fraction of a percent (100 basis points = 1%).

A person designate in a will, insurance policy, or retirement plan to receive funds, assets, or proceeds when the owner dies.

Shares of well-known companies with solid financial histories and reputations of steady earnings and dividends.

This is the safety value of a particular bond assigned by independent agencies, such as Standard & Poor’s, that evaluate the possibility of default (whether you will actually get the principal and interest when you are supposed to receive it).

The debt of a corporation or the government. A bond buyer provides money to the institution, which in turn pays back the sum with interest at a specified time.

An intermediary between buyers and sellers of stocks and other securities (e.g., firms like Fidelity). There are three basic levels of brokerages. 1) On-line brokers are the bargain basement and simply let you execute trades over the computer without even talking to a person. 2) Low-commission discount brokers offer little or no advice, but can be an inexpensive way to  buy and sell securities. 3) Full-service brokers help make decisions and may provide research materials, but are expensive.

The amount you make or lose from selling one of your assets (like your home).

Amount paid by mutual funds, regulated investment companies, real estate investment trust and certain other entities from the capital gains of the company’s investment portfolio. Capital Gains distributions typically occur near the end of the calendar year.

Your total monthly income minus your total monthly expenses is your monthly cash flow.

The withdrawal amount from a portfolio that a client will expect to make during a given period. Identifying the cash withdrawal amount facilitates greater insight into the client’s income needs and aids in determining the minimum assets necessary to achieve the objectives identified in the portfolio strategy.

An insured bank deposit with a guaranteed interest rate that is held for a set time period, usually three months, six months, one year, or five years.

The designation for financial planners who are certified by the Board of Standards. A CFP must complete a series of courses and continuing education credits on an annual basis.

An arrangement in which highly appreciated assets are donated to a charity, but the donor continues to use the property and/or receive income from it while living. The beneficiaries receive the income and the charity receives the principal after a specified period of time. The grantor avoids any capital gains tax on the donated assets, and also gets an income tax deduction for the fair market value of the remainder interest that the trust earned. In addition, the asset is removed from the estate, reducing subsequent estate taxes. While the contribution is irrevocable, the grantor may have some control over the way the assets are invested, and may even switch from one charity to another.

Designation awarded to qualified financial planners by the American College in Bryn Mawr, PA.

Monthly payments required by state law that a non-custodial parent must provide to support his or her children. These are not taxable payments.

The Consolidated Omnibus Reconciliation Act (COBRA) is a federal law that requires a company health plan to continue offering you and any dependents coverage for at least 18 months including if you have been divorced, separated, or if your spouse has died. You must pay the premiums. You have 60 days to decide to stay on your spouse’s plan.

Equity shares in any publicly traded company.

Property divided according to who has title to the asset.

Property and assets accumulated during marriage are divided equally between the two divorcing parties. Property acquired before the marriage or inherited is excluded. Each state determines it’s own community property laws. Not all states recognize community property. California is a community property state.

A standard against which the performance of a portfolio can be measured.

The combination of your principal investment and the subsequent interest it earns that keeps the pot growing month to month and year to year. The more the money compounds, the more interest your investment earns.

Shares of companies whose earnings move up and down with the economy (like automakers and home builders).

Any event that results in a material change to a company. Corporate actions tend to refer to very specific actions such as takeovers, bonus issues, stock splits, share buybacks and rights issues.

Your permanent record of your financial health as far as lenders are concerned. Late (over 30 days) payments, missed payment, and credit applied for is noted and recorded for at least seven years. A bad credit rating can make it hard or very expensive to obtain a loan, a job, or even open a bank account.

The amount paid under an insurance plan before the insurer pays any charges.

A traditional pension plan in which an employer uses a formula based on salary and years of employment with the firm to devise an income to be paid to the employee or beneficiary on a regular basis at retirement.

Insurance coverage that pays benefits if you are unable to work for a period of time due to physical or emotional problems.

The practice of investing broadly across a number of securities (differentiated by factors such as asset class, geographic location, duration and industry) in an attempt to reduce risk.

Payouts to shareholders by a corporation based on a percentage of its earnings (could be in the form of cash or additional shares).

A method for investing a fixed amount of money at regular intervals, regardless of price per share.

A charitable giving vehicle administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. A donor-advised fund offers the opportunity to create an easy-to-establish, low cost, flexible vehicle for charitable giving as an alternative to direct giving or creating a private foundation. [citation]

The Dow Industrial, Composite, Transportation, and Utility averages are indicators of how the stock market is faring. The Industrial consists of 30 major stocks like Disney and IBM. There are 20 stocks in the Transportation average and 15 stocks in the Utility average. The Composite consists of 65 stocks that are a combination of the others.

The investigation and evaluation of a management team’s characteristics, investment philosophy, and terms and conditions prior to committing capital to a fund or money manager. The term also refers to the process whereby a fund manager inspects a company, its management, product, accounting, etc., prior to making an investment.

A legal document by which you empower someone to handle your financial affairs if you are alive but incapacitated.

The basic method of distributing property in most states. A court decides how to divide the assets of your marriage based on criteria such as need, earnings potential, and financial contribution to the marriage.

This is your blueprint for the orderly disposition of your assets when you die.  This should include writing a will, naming a guardian for your children, and designating an executor to handle your affairs.  It should also address tax planning to help reduce the tax burden levied on your estate.

The taxes levied by the federal and state government on a deceased person’s assets.

The estimated value of the income received if the current market value had been maintained for an entire year (12 month period).

A basket of stocks that is bought and sold on a stock exchange as if it were a single stock.

The individual named in a will to handle the settlement of the estate.

The appreciation or depreciation in value of the portfolio holdings during the period specified before the deduction of investment management fees and transaction costs, if any, associated with managing the portfolio.

Investments offered by insurers that guarantee a fixed-income return for a specified period. They are generally offered as part of 401(k) plans.

The person whom you select to take care of your children if they are under age 18 when you die.

A legal document in which you designate a person to make medical decisions for you if you are unable to do so. It can be paired with a living will.

Bonds that are issued by corporations whose financial health is somewhat questionable. There is a clear risk that they may be unable to repay your principal.

The period of time from the account’s performance start date through the most recent month end.

Mutual funds that invest their assets mostly in corporations that have a consistent, stable history of paying dividends.

Mutual funds that attempt to replicate a certain established stock index like the S & P 500.

A tax-deferred retirement plan that may allow you to invest up to a specified amount, in an account that is tax-deferred until you withdraw the money at retirement. Income taxes may be due and there is a 10% federal penalty for removing the funds before age 59 ½. At age 70 ½ distributions are required.

Mutual funds that invest in stocks of non-US. firms. Some invest in only one country or in a specific region. International investing involves additional risks such as currency fluctuation differing financial accounting standards and possible political and economical instability.

A group of people who research stock investments and pool their money together to invest regularly as one entity.

A strategy designed to achieve specific client objectives. Willow Grove begins by reviewing your personal goals to determine specific objectives for distinct portfolios tied to these objectives. We construct portfolios using quantitative models, examining the interrelationships between the returns on different types of investments to control the likelihood of substantial drift from the overall goals.

What you owe.

Liquidity is the measure of how fast you can get your money back from an investment. Savings and money markets are considered to be highly liquid.  Real estate is ill-liquid because of the time it would take to sell and the cash to become available.

A revocable trust that you establish while you are alive to make sure your assets are managed properly if you are disabled, unable to manage you assets yourself or pass away. A trust will allow your assets to pass to the designated beneficiaries without first going through probate proceedings and will safeguard the privacy of the estate.

A legal document that spells out just how much medical intervention you desire if you have a terminal illness.

Mutual funds that levy an up-front sales charge, or commission, when you buy or sell.

These are brokerage accounts that let you borrow against the value of the securities in your account to make additional investments. You can typically borrow up to 50% of the value of any liquid security. Margin accounts are not suitable for all investors and involve certain risks and restrictions.

The date at which a bond must be paid in full.

Free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the US & Canada.

The process of bring conflicting parties together using a third party.

A fund which invests in very short term securities. Money market funds are considered cash equivalents.

One of a number of quantitative tools that analysts use to assess the probability of meeting specific financial goals at certain time periods in the future. This is accomplished by generating thousands of possible paths (or scenarios) that investments might take over a given period.

Bonds issued by a local or state government. The interest from these bonds is free of federal and (usually) local and state taxes.

A selection of stocks and bonds, or a mixture of investments, that are pooled together, sold as shares to individual investors, and managed by a professional money manager.

A membership association of brokerage firms and stock underwriters in the United States. They adhere to ethics guidelines, strict industry procedures, and disciplinary actions for rules violations.

The market value of a mutual fund share. The value is the total of all the fund’s shares minus any liabilities divided by the number of outstanding shares.

The appreciation or depreciation in value of the portfolio holdings during the period specified after the deduction of investment management fees and transaction costs, if any, associated with managing the portfolio.

Mutual funds that do not charge sales commissions when you buy or sell shares of the fund.

The month end date of the initial transaction on the custodian of record’s statement for this account. For example, if an account receives the first transaction on July 18 then July 31 will be the performance start date. If an account is only partially funded at month end, the start date may be delayed to the following month end date.

A strategy designed to achieve specific client objectives. Willow Grove begins by reviewing your personal goals to determine specific objectives for distinct portfolios tied to these objectives. We construct portfolios using quantitative models, examining the interrelationships between the returns on different types of investments to control the likelihood of substantial drift from the overall goals.

A legally binding agreement signed before marriage that denotes how assets will be divided in the event of death or divorce.

A court process to administer a will.

Assessment of a mutual fund, or money manager through the evaluation of the of subjective factors such as the management team, experience, process, philosophy, attitudes etc.

Assessment of a investment vehicle or a portfolio of securities through evaluation of relevant financial data to project potential future performance. This methodology involves looking at statistics, histories, and the state of the economy rather than at more subjective factors such as management experience, employee attitudes, and brand recognition.

A performance return that links all monthly returns for the previous quarter. A value is presented only if the account has a Performance Start Date on or before the start of the current quarter.

How much your invested money is likely to make in a given period of time.

Assets that provide real purchasing power protection to the portfolio during periods of high inflation whose returns typically have low correlations to those of financial assets.

The minimum amount of reserve funds needed by the client, held in money market funds and other cash equivalents, to accommodate unexpected needs for cash.

A measure of possible loss in value. Generally, if the investment is risky, the return potential is higher.

Contributions to a Roth IRA retirement plan are not tax deductible, however, investments within the Roth IRA are allowed to grow tax exempt and, with a few restrictions, there is no tax liability on the distributions.

Domestic equity index consisting of 500 stocks representing approximately 75% of the total U.S. equity market focusing on the large-cap sector of the U.S. equities market. The index includes the 500 leading companies in leading industries of the U.S. economy.

Mutual funds that buy stocks in just one industry (like autos or biotechnology).

The SEC is the federal agency assigned to regulate the securities industry and protect investors from fraudulent activities.

The Sharpe Ratio considers the risk incurred in order to generate the expected return. The higher the ratio, the more return per unit of risk.

A retirement plan for the self-employed, known as the Simplified Employee Pension plan, in which an IRA is opened and up to 13% of net earnings can be contributed tax-deferred until retirement.

Separately Managed Account. A portion of a portfolio managed by an independent money manager in a segregated account for each client following a specific style of investing.

Retirement funds paid by the federal government, provided you have been employed for at least 40 quarters.

Mutual funds that buy shares only in firms that do not conflict with certain social priorities. (Ex. They might avoid companies that sell tobacco-related products or choose companies with excellent environmental records.)

A statistical measure of volatility that expresses the range in which prices fluctuate.

Shares in a company that are sold to raise capital. There are more than 8,700 publicly traded companies.

Projecting the impact of past market movements on the value of a portfolio.

Straight life insurance with no extra cash value. You, the named beneficiary, receive the benefit when your spouse dies.

The expected length of time a portfolio has to achieve its stated purpose or goal.

A short-term debt instrument issued by the federal government. The bills mature in periods of 3 months, 6 months, or one year.

A long-term debt instrument issued by the federal government that matures in 10 to 30 years. Interest is paid twice a year.

A medium-term debt instrument issued by the federal government that matures in 1 to 10 years. Interest is paid twice a year.

The federal government issues Series EE bonds. You can purchase them through most banks, credit unions, and S & Ls. All interest is free of state and local taxes.

A type of insurance in which part of the premium goes toward buying insurance and the remainder is invested.

The right to own shares of company stocks, stock option, 401(k) matching or other asset once an individual has completed a certain period of employment with or attachment with that company.

A statistical measure of the amount of fluctuation in a stock’s price within a period of time. A stock with high volatility would have rapid up and down movements in its stock price. A stock with very little movement in its price would constitute low volatility.

A legal document stating how you want your assets to be dispersed following your death and naming a guardian for minor children. Does not avoid probate.

A plan offered by brokerages and banks that charges investors one annual fee to provide a professional money manager to help manage all your investments.

The period beginning December 31st of the prior year to the most recent month end. In respect to performance returns, a YTD value is presented only if the account has a Performance Start Date on or before December 31st of the prior year. For Realized Gain Loss YTD, this is a sum of all RGL transactions during the current year. Last 12 Months — A performance return that links all monthly returns for the prior 12 months. A value is presented only if the account has 12 or more monthly returns.

A bond that sells at a steep discount from its face value and pays no interest until it matures, at which time you can redeem it at the full face value.