Plain-English definitions of the most important personal finance terms, from budgeting and saving to investing and Islamic finance.
Anything you own that has value and can be converted to cash.
The annual cost of borrowing money, including interest and fees.
A plan for how you will spend and save your income over a set period.
Interest earned on both the original amount and the interest that has already been added.
A number that represents how likely you are to repay borrowed money.
Profit from selling an asset for more than you paid.
The percentage of your monthly income that goes toward debt payments.
Spreading investments across different assets to reduce risk.
Money set aside to cover unexpected expenses or loss of income.
A basket of securities that trades on an exchange like a stock.
Total income before taxes and deductions.
Investing in compliance with Islamic principles.
The general increase in prices and decrease in purchasing power over time.
A debt or financial obligation you owe to another person or institution.
How quickly an asset can be converted to cash without losing value.
An investment vehicle that pools money from many investors to buy securities.
Your total assets minus your total liabilities.
The minimum amount of wealth that makes zakat obligatory.
Income remaining after taxes and deductions.
Return on Investment: a measure of how much profit you earn relative to what you invested.
Your ability and willingness to endure losses in your investments.
A specific amount of money you plan to save by a target date.
Islamic financial certificates similar to bonds but asset-backed.
An annual charitable obligation in Islam based on eligible wealth.