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2017-10-20 05:15

Financial Glossary

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Refinance

Retiring an existing mortgage in exchange for a new loan, with the same real estate property used as collateral. Refinancing is done to take advantage of better loan terms, such as a lower interest rate.

Registered representative

A person who is licensed to sell securities and act as an account representative for clients.

Revolving debt

Debt without a fixed principal or payment. Credit cards and home equity lines of credit are examples of revolving debt.

Required minimum distributions (RMD)

The minimum amount that IRA holders and participants must withdraw by April 1 of the year following the year they reach age 70 ½. RMDs must then be taken each following year. Roth IRAs are exempt from this rule.

Rider

An amendment to an insurance policy that alters the policy’s terms, benefits or coverage. Riders allow you to create an insurance policy that meets your specific needs.

Risk

The chance of loss or actual returns that differ from the expected return. The greater the variability of a given investment, the greater the risk. Investments that have greater risk must offer higher returns.

Roth IRA

A type of individual retirement account (IRA) where contributions to the account are not tax-deductible but withdrawals are tax-free. A Roth IRA also differs from a typical IRA in that contributors are not required to take distributions after they reach a certain age.

Rule of 72

A formula that allows you to estimate how long an investment with compound interest will take to double in value. To use the Rule of 72, divide 72 by the annual rate of return.