Every term, in plain English.

An employer-sponsored, tax-advantaged retirement account in the US. Contributions are often made pre-tax and many employers match a portion, which is effectively free money toward your retirement.

How you divide a portfolio across asset classes such as stocks, bonds, and cash. It is the single biggest driver of long-run returns and risk.

The total market value of investments a fund or manager oversees. Larger AUM often signals liquidity and lower closure risk for an ETF.

A prolonged period in which prices fall 20% or more from recent highs. Bear markets test discipline but historically have been followed by recoveries.

A rare, high-impact event that is hard to predict and obvious only in hindsight — for example a sudden global financial shock. Diversification softens, but cannot eliminate, the impact.

Shares of large, well-established, financially sound companies with reliable track records. Often held for stability and steady dividends.

A loan you make to a government or company in exchange for periodic interest and the return of principal at maturity. Bonds generally add stability to a portfolio.

An extended stretch of rising prices and investor optimism. Bull markets can last years, which is why staying invested tends to reward patience.

The smoothed annual rate at which an investment would have grown to its final value, assuming profits were reinvested. A cleaner way to compare returns than a simple average.

The profit from selling an asset for more than you paid. Long-term gains (held over a year) are usually taxed at lower rates than short-term gains.

Earning returns on both your original money and the returns it has already generated. Over decades this snowball effect dominates the final outcome — the engine behind every projection here.

Spreading money across many investments so that no single one can sink the portfolio. It is the closest thing investing has to a free lunch.

A share of company profits paid to shareholders, usually quarterly. Reinvesting dividends is a powerful, often-underestimated source of long-term returns.

Investing a fixed amount on a regular schedule regardless of price. It removes the temptation to time the market and naturally buys more shares when prices are low.

The peak-to-trough decline of an investment before it recovers. Knowing the drawdowns you can stomach helps you pick an allocation you will actually stick with.

A basket of securities that trades on an exchange like a single stock. ETFs offer instant diversification, low fees, and intraday trading.

The annual fee a fund charges, expressed as a percentage of assets. A 0.03% ratio costs $3 a year per $10,000 — small differences compound into real money over decades.

A fund that mirrors a market index such as the S&P 500 rather than trying to beat it. Low cost and broadly diversified, it is a cornerstone of passive investing.

The gradual rise in prices that erodes the purchasing power of money. This is why 'real' (inflation-adjusted) returns matter more than 'nominal' headline numbers.

How quickly and cheaply an asset can be converted to cash without moving its price. Large ETFs and blue chips are highly liquid; niche assets may not be.

The total value of a company's shares — price multiplied by shares outstanding. Used to classify companies as large, mid, or small cap.

A technique that runs thousands of randomized scenarios to map a range of possible outcomes rather than a single guess. assetDCA uses it to show best, median, and worst-case paths.

Nominal return is the raw percentage gain; real return subtracts inflation to show the actual increase in buying power. Always think in real terms for long horizons.

Price-to-earnings — a stock's price divided by its earnings per share. A rough gauge of how expensive a company is relative to its profits.

The complete collection of investments you own across all accounts. Managing it as one whole, rather than as scattered positions, leads to better decisions.

Periodically buying and selling to return a portfolio to its target allocation. It enforces a disciplined 'sell high, buy low' habit.

Your personal capacity to endure losses without panic-selling. Matching your allocation to it is more important than chasing maximum returns.

A US retirement account funded with after-tax money, where qualified withdrawals in retirement are tax-free. Especially valuable if you expect higher taxes later.

An index of 500 of the largest US public companies, widely used as the benchmark for the US stock market and the default 'market return' in most models.

Increasing the amount you invest each year, often in line with raises. Small annual step-ups dramatically lift the final balance thanks to compounding.

How much an investment's price swings, usually measured as standard deviation. Higher volatility means a wider range of outcomes — both gains and losses.

The income an investment produces (dividends or interest) as a percentage of its price. A bond yielding 4% pays $40 a year per $1,000 invested.