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S&P 500 - The Standard & Poor's 500 is an index made up of 500 blue chip stocks. The index is commonly used to measure stock market performance. Safe harbor plan - A type of 401(k) plan that exempts the employer from the special nondiscrimination tests that apply to regular 401(k) plans. Under a safe harbor plan, the employer has to pay a certain amount of money into the accounts of nonhighly compensated employees. There are various formulas for calculating the amount of these contributions, which have to be fully vested from the word go. This plan option first became available on Jan. 1, 1999. Sales Commission - A fee an investor pays a broker for buying or selling securities. Securities - An instrument issued by a corporation or government that denotes a debt or ownership interest. Stocks and bonds are referred to as securities. Shares Outstanding - The shares of a corporation's stock that have been issued to the public and are in the hands of investors. Short Sale - A sale of stock before the seller owns it. The seller believes that the stock's market price will decline before the shares that will cover the sale have to be bought. If the price falls, the seller profits. Single-Pay Life - A whole life policy purchased with one premium payment. Small Cap Funds - Mutual funds that primarily invest in small, start-up or very specialized companies. Small cap funds typically invest in companies with a market capitalization greater than $300 million but less than $1 billion. Special Situation - An unusual investment opportunity, such as a company involved in a merger, takeover, liquidation, spinoff, turnaround, or new product development. Speculation - Assumption of above-average investment risk in exchange for the opportunity to secure an above-average return. Spin-off - Division of an existing corporation into two (or more) separate corporations. The shareholders of the predecessor company receive the shares of the spun-off corporation(s). Stock - Stock represents ownership in a company. The stock holder's percentage of ownership in the company can be calculated by dividing the number of shares he or she owns by the total number of shares outstanding. The value of a stock will fluctuate with the company's performance and the stock market in general. Stock Dividend - A dividend paid in stock (or other securities) rather than in cash. Stock Fund - A mutual fund that invests in many stocks, offering investors diversification and professional management. Stock Mutual Fund - An investment company that invests primarily in stocks. The investment objective of most stock funds is growth, although some funds also have a secondary objective of income. Stock Split - An allocation of newly issued stock to shareholders according to their current holdings so that there is no change in the shareholders' relative ownership positions. A company generally uses a stock split to reduce its stock's price to what the company believes will be a more marketable trading level. Stop (stop loss) Order Street Name - Securities held in a broker's name rather than the owner's. Stocks bought on margin are always held in a street name. Surrender Charge - The fee an insurance company would assess against the cash value of a life insurance policy if the owner were to surrender the policy. The amount of the surrender charge will usually be highest in the first year of a policy and decreases over time until eventually it is zero. Surrender Charge Period - The number of years during which the insurance company would charge the owner a fee if the owner chooses to surrender the contract. Surrender Charge Schedule - A schedule illustrating the fee the insurance company charges for making early withdraws from the annuity contract. The surrender charge is generally on a sliding scale that decreases the longer you have owned the annuity. Survivors - Individuals, usually family members, who face emotional and sometimes financial setbacks because of your death. |
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