Financial Glossary - D
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Debit-The deduction of money from a financial account.
Debt-General term used to indicate an outstanding balance of money owed for loans, mortgages, credit cards, and other forms of credit.
Debt Limit (Debt-to-Income Ratio)-The maximum amount of debt that a person should have expressed as a percentage generally is no more than 15% to 20%) of their monthly after-tax (net) income.
Debt Reduction-A systematic process of repaying debt to reduce the outstanding balance owed.
Defined Benefit Pension Plan-A type of pension that promises a retiree a specific monthly benefit at retirement based on a formula that incorporates factors such as earnings (e.g., average of highest 3 or 5 year's salary) and years of service.
Defined Contribution Pension Plan-A type of pension where a worker and/or worker's employer contributes to an account in the worker's name and the amount received at retirement is based on the amount contributed and investment gains and losses. There is no formula to calculate future benefits. Defined contribution plans are used increasingly by employers instead of defined benefit.
Deposit-The addition of money to a financial account.
Direct Deposit-The process of depositing money electronically into a bank or credit union transaction account. Direct deposit is commonly used for employee paychecks and government benefit checks.
Direct Transfer–Movement of retirement funds from one qualified retirement plan directly to another qualified plan without the owner taking possession of the funds.
Disability Insurance-Type of insurance that replaces lost earnings when someone is unable to work due to accident or illness.
Diversification-The process of selecting different investments to reduce investment risk.
Dividend-A distribution of income from investments to shareholders.Dollar-Cost Averaging--The process of investing a regular amount at a regular time interval.
Dow Jones Industrial Average (DJIA)–The Dow Jones Industrial Average is an average of the stock price of 30 selective stocks. It is widely quoted each day as a barometer of stock market activity. Because the Dow Jones Industrial Average uses such a small number of stocks, it is often criticized for not representing the whole market, which is why other indexes, such as the Standard and Poor's 500 and Russell 3000, also are used.
Updated:E.J.B.