The Blue Jay Advisors Financial Flight Path Glossary

The total amount of money currently in your bank, investment, or retirement account.

Paying off a loan in regular payments over time. Each payment covers interest and part of the principal you owe.

The yearly cost of borrowing money, including interest and certain fees, expressed as a percentage.

Anything of value you own like cash, stocks, mutual funds, gold, a car, or a home.

A plan that outlines your income, spending, and savings to help you reach financial goals.

Interest that earns interest. It grows over time on both the money you deposit and the interest that accumulates.

A number (usually between 300 – 850) lenders and others use to determine how likely you are to repay borrowed money or otherwise be trustworthy in finance related matters.

A financial obligation undertaken by a borrower that must be repaid to the lender, usually with an additional payment of interest. 

A measure lenders use to compare your total monthly debt payments to your gross monthly income.

Spreading investments across different types of assets to reduce risk.

Savings set aside for unexpected expenses like car repairs or medical bills. General rule of thumb is 3–6 months of living costs.

The value of what you own in an asset after subtracting what you owe. Example: If your home is worth $300,000 and your mortgage is $200,000, you have $100,000 in equity.

Preparing legal documents (like a will or trust) that explain how your assets should be handled after your death or if you’re unable to make decisions.

For investments like mutual funds, this is the annual fee charged by the fund manager as a percentage of assets.

FICO is the acronym for Fair Isaac Corporation, as well as the name for the credit scoring model that Fair Isaac Corporation developed. 

A professional (like a financial advisor) who is legally required to act in your best financial interest.

A regular cost that stays the same each month, like rent, car payments, or insurance premiums.

A tax-advantaged account designed to help people save for retirement. Anyone with earned income can open an IRA, including minors and those who already have a retirement plan through their employer, like a 401(k) 

The general rise in prices over time that reduces the purchasing power of your money. Certain assets, like real estate for example, can protect (or hedge) your money from inflation.

Something you owe, such as a loan, mortgage, or credit card balance.

How easily an asset can be turned into cash without losing much value. Cash and cash accounts (savings, checking, money market) are considered liquid while real estate, art, or collectables are illiquid. 

An investment that pools money from many people to buy a diversified mix of stocks, bonds, or other assets.

The total value of everything you own minus everything you owe.

All your investments combined such as stocks, bonds, real estate, and cash.

The original amount of money you invest or borrow, not including interest.

A measure of how much profit or loss you’ve made on an investment compared to the amount you invested 

The possibility of experiencing a loss. Strategies to address risk are  avoidance (eliminating the activity that creates the risk), risk reduction (minimizing the likelihood or impact of the risk), risk transfer (shifting the risk to a third party, such as through insurance), and risk acceptance   

How comfortable you are with the ups and downs of investing usually based on your goals, time frame, and personality.

A retirement account that allows you to invest after-tax money. Withdrawals in retirement are tax-free if certain conditions are met.

Earnings on which you pay taxes later, not now — like in a traditional IRA or 401(k).

A life-insurance policy that covers you for a specific period (for example, 20 years) and pays a benefit if you pass away during that time.

A retirement savings account offering tax advantages, including potential tax-deductible contributions and tax-deferred growth on your investments. Funds are not taxed until withdrawn in retirement, usually after age 59 1/2.  

A cost that changes each month, such as utilities, groceries, or travel.

The process of growing your assets through consistent saving, investing, and smart financial choices.