Welcome to my glossary of finance terms, here you can find definitions for many of the terms and acronyms I use throughout this site. To navigate through the Glossary simply select one of the letters above and browse at your leisure.
From the category archives:
Glossary
A 401(k) is a type of tax deferred retirement account typically offered by employers as an incentive for employees to save for retirement. The plans are called 401(k)’s because of the section of Internal Revenue code that makes them possible.
Payments into the plan, also known as contributions, are made pretax and grow tax free until they are withdrawn during retirement. More recently Roth 401(k) plans have become available where the contributions are made post tax and distributions from the plan are tax free.
One of the major benefits of 401(k) plans over other retirement options is employer matching. Many employers will match their employees contributions to the plan up to a certain percentage. This amounts to free money for the employee which will help fund their retirement.
{ Comments on this entry are closed }
The yield spread premium is money paid to a mortgage broker when they originate a loan higher than the current Par Rate. This type of “fee” is considered a back end fee by the broker. They aren’t actually paid by you the borrow but are paid by the lender because they sold you a loan at a rate higher than the par rate.
Mortgage brokers are required to report their YSP to the borrow within three days of an application via the good faith estimate and again in the Hud-1 Closing statement at closing.
{ Comments on this entry are closed }
The Personal Savings Rate is a statistic released by the Bureau of Economic Analysis which is an indicator of how much of their money Americans are hanging on to. The amount of personal savings is determined by taking the Disposable Personal Income minus personal spending (interest payments, personal consumption expenses, and transfers). That amount is then expressed as percentage of disposable income, so a Personal Savings Rate of 4.6% means that only 4.6% of disposable income is being saved.
{ Comments on this entry are closed }
