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Taxable Income - The amount of income that a taxpayer looks up in a tax table to determine the tax due on after subtracting adjustments, deductions, and exemptions from gross income.
Tax-Deferred - Investments where earnings that are not taxed in the current year but will be later, usually at the time of withdrawal. Examples of tax-deferred investments are Individual Retirement Accounts (IRAs), employer 401(k) and 403(b) plans, and annuities.
Tax-Exempt (Tax-Free) - Investments where earnings are free from tax liability. An example of a tax-exempt investment is municipal bonds and bond funds.
Term Life Insurance - Type of life insurance policy that pays benefits only if the policyholder dies within the period of time covered by the policy. Term policies are generally the least expensive type of life insurance policy because there is no cash value (savings) component.
The Rule of 72 - Formula used to determine at what interest rate or during what time period a sum of money will double. The answer is found by dividing the known variable into 72.
Thrift Savings Plan (TSP) - A retirement savings plan that is offered to federal government workers, both uniformed service members and civilian employees.
Time Value of Money - The fact that a dollar received today is not worth the same as a dollar received at a previous or future time period, due to the interest that can be earned on the money.
Total Return - The combination of income and capital gains or losses on an investment.
Treasury Bills, Bonds, and Notes - Debt obligations of the U.S. government. Treasury bills are the shortest term investment, followed by Treasury notes (intermediate-term), and Treasury bonds (long-term). All three types are available for a minimum deposit of $1,000 or in multiples thereof.
Triple Witching Day - The third Friday of March, June, September, and December when contracts for stock index futures, stock index options, and stock options all expire and financial markets tend to be particularly volatile.
Trust - A legal instrument that grants control of one's assets to a person or financial institution. Trusts can be revocable or irrevocable and can manage property while the creator is alive (living trust) or following the creator's death (testamentary trust).
Trustee - A person or financial institution that manages the property of others.
Turnover Rate - The percentage of mutual fund holdings that have changed in a year. The higher the turnover rate (e.g., 100% vs. 20%), the higher a fund's transaction costs and taxable gains.
Updated:E.J.B.
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