Interest calculated on both the initial principal and the accumulated interest from previous periods. Often called 'interest on interest,' it's the foundation of wealth building over time.

The rate at which the general level of prices for goods and services rises, eroding purchasing power over time. A key consideration in long-term financial planning.

The total value of your assets minus your liabilities. A key measure of overall financial health that should grow over time.

A simple formula to estimate how long it takes for an investment to double. Divide 72 by the annual interest rate to get the approximate years needed.

The concept that money available today is worth more than the same amount in the future due to its potential earning capacity through interest or investment returns.

The strategic distribution of investments across different asset classes like stocks, bonds, and cash to balance risk and reward according to your goals and risk tolerance.

Spreading investments across different assets to reduce risk. The principle that not putting all eggs in one basket reduces the impact of any single investment's poor performance.

A type of mutual fund or ETF designed to track the performance of a market index. Known for low costs and broad diversification.

The process of realigning your portfolio's asset allocation back to your target percentages by buying or selling investments.

An investment strategy where you invest a fixed amount regularly regardless of market conditions, reducing the impact of volatility on your overall purchase.

Two debt repayment strategies: Avalanche pays highest interest first for math efficiency; Snowball pays smallest balance first for psychological wins.

A financial safety net of liquid savings designed to cover unexpected expenses or income loss. Typically recommended to cover three to six months of essential expenses.

Your ability and willingness to endure declines in investment value. Influenced by your time horizon, financial situation, and emotional comfort with volatility.

Tax-advantaged accounts like 401(k)s and IRAs designed to help you save for retirement with special tax benefits.

Understanding different account types like checking, savings, CDs, and money market accounts helps you optimize where your money lives.

A three-digit number (300-850) that represents your creditworthiness. Lenders use it to determine loan approval and interest rates.

Understanding progressive tax brackets, deductions, and credits helps you make smarter financial decisions and reduce your tax burden.

Insurance protects you from financial catastrophe. Understanding health, life, auto, home, and umbrella coverage helps you make informed decisions.

Digital or virtual currency using cryptography for security. Highly volatile but potentially innovative asset class for portfolio diversification.