NEW YORK (MainStreet) — Weeding through the arcane, confusing and complicated terminology used by personal finance and investing experts can be a chore.
The acronyms alone can make your head spin and make it even more difficult to get a good grasp of managing your finances. But deciphering the off-putting lexicon can help Main Street investors navigate their personal finances and even save some money down the road in interest and other ubiquitous fees.
Here are ten popular terms that we demystify.
Liquid assets are ones that you can access such as withdrawing money from a checking or savings account without paying a penalty to access it, unlike taking money out of a retirement account in most circumstances.
“Many people discover too late that putting their life's savings into a government controlled 401(k) or IRA is like putting their money in prison,” said Pamela Yellen, a financial security expert based in Sante Fe.
Though contributing to retirement is all the more necessary as consumers live longer and require additional funds to offset increased living and medical expenses, it's important for Americans to have money at the ready they can deploy. As a rule, consumers should have six months' worth of living expenses in an emergency fund.
This term is often misunderstood and is found in your credit card user agreement. The grace period does not refer to the amount of time a consumer has before the minimum payment is due. Instead, it is referring to the amount of time before interest is applied to a purchase.