Do you speak finance? The acronyms you should know

The financial world has its own shorthand, and the more you understand these terms, the easier it can be to make informed financial decisions. Here are some common acronyms and their meaning. 

401(k) : A 401(k) is a company-sponsored retirement account that allows employees to save for retirement by contributing a percentage of their income. Employers may offer matching contributions. 

403(b) : Similar to a 401(k), a 403(b) is a retirement account that allows employees to save for retirement by contributing a percentage of their income. The difference is that 403(b)s are typically for employees of tax-exempt organizations like public schools and nonprofits. 

AGI : Adjusted gross income is an abbreviation you likely see every year during tax season. It’s a number that the Internal Revenue Service (IRS) uses to determine how much income tax you owe. AGI is calculated by taking your total (or gross) income for the year and deducting certain items, like educator expenses, student loan interest, alimony payments, and self-employment taxes. 

APR : Comparing lenders for a mortgage or car loan? Pay more attention to the annual percentage rate (APR) than the interest rate. APR shows you interest plus fees and other charges, which can add up. 

Tip: APR affects student loans as well, so take time to investigate your options, and make sure you’re saving enough for college. 

CAGR : Compound annual growth rate is the rate of return you’ll get on an investment because of compounding or reinvesting the profits over the lifespan of the investment. You can think of compounding as a wealth-building tool. Imagine a small snowball rolling down a steep hill. The longer it rolls, the more snow it accumulates. Your original investment can grow by accumulating earnings on top of earnings over time. 

Tip: Start saving early and remember your tax burden also compounds, so plan accordingly. 

CPI: TheConsumer Price Index is a measure of inflation. It measures the monthly change in prices paid by US consumers for goods and services. 

ETF: An exchange-traded fund is an investment vehicle that pools a group of assets into one fund. It can be bought and sold on an exchange like an individual stock. 

FDIC: The Federal Deposit Insurance Corporation is an independent US government agency that insures bank deposits and examines financial institutions for safety and soundness. When you deposit money in a savings or checking account, FDIC insuresthat money against loss due to bank failure up to $250,000. 

FICO: You probably recognize FICO, short for Fair Isaac Corporation, if you’ve ever taken out a loan or opened a bank account. Lenders use FICO’s predictive analytics to calculate your creditworthiness, most commonly represented as your credit score. 

Tip: To help raise your FICO score, pay your bills on time and avoid carrying high balances on credit cards. 

HNWI: High-net-worth individual — what many of us aspire to be — are generally those with over $1 million in liquid financial assets. This number may vary based on the financial organization.

HSA: A Health Savings Account is a special savings account offered by many employers. They allow you to deposit money from your paycheck and withdraw that money tax-free for medical expenses. Unspent HSA funds roll over from year to year and the funds can be invested, potentially growing the funds to help you cover future health care costs. 

IPO: An initial public offering is the first time a private company sells shares of its stock to the public. This event allows the company to raise capital and signifies that the company has gone from private ownership to public ownership. 

IRA: Individual retirement accounts are a popular wayto save for retirement. Social Security alone likely won’tbe enough to be your sole source of income in retirement — an IRA providesa way to save additionalmoney. 

Tip: An IRA is only part of the equation. Securing guaranteed income in retirement can help you retire with more confidence. 

LLC: A limited liability corporation is a common type of corporate structure that protects its owners from certain types of liabilities, like debts. LLCs also allow profits and losses to get passed through to their owners’ personal income without paying corporate income tax. 

RMD: A required minimum distribution is the minimum amount of money you must withdraw annually from some retirement accounts beginning the year you turn 73. If this amount is not withdrawn, you could face a tax penalty. 

ROI: Return on investment measures the profitability or benefit earned on money you’ve invested. 

TCO: Total cost of ownership shines a light on the full costs of owning an asset. Whether it’s a car or a house, the price tag is just the tip of the iceberg. Make sure you identify all costs for maintenance, upkeep, service, and so on, so you can budget accordingly. 

If you need help understanding any of these acronyms or have any questions about your financial situation, please don’t hesitate to reach out to me. I’m always happy to help.

DISCLAIMER: 

This material is intended for general public use. By providing this content, The Guardian Life Insurance Company of America, and their affiliates and subsidiaries are not undertaking to provide advice or recommendations for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial representative for guidance and information that is specific to your individual situation. 

Brought to you by The Guardian Network© 2025. The Guardian Life Insurance Company of America®, New York, NY. 

7919905.1 Exp. 5/27 *pre-approved content*