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2017-10-20 05:15

Financial Glossary

s

Safety of principal

A method of investment focused on the security of the invested principal.

Salary Reduction Simplified Employee Pension Plan (SARSEP)

A simper version of a 401(k) plan offered by small companies. Employees participating in the plan are able to make pre-tax contributions to their individual retirement accounts (IRAs). SARSEPs were replaced with SIMPLE plans in 1996—existing SARSEP plans can add new participants but new plans cannot be formed.

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)

A retirement plan for small businesses, similar to 401(k) or IRA but more flexible. Employees can make salary deferral contributions and employers can make either matching or non-elective contributions. Companies with 100 or fewer employees can offer these plans.

Securities and Exchange Commission (SEC)

The U.S. government agency that regulates the securities industry and financial markets.

Short sale

Selling a security you do not yet own but promise to take ownership of at a given point in the future. Investors borrow the security from a broker and sell it, hoping to take advantage of an expected decline in the price of the security.

Simplified Employee Pension (SEP)

A retirement plan for small businesses and the self-employed. Both employees and the employer can make contributions to the retirement account.

Small cap

Stock issued by a company with a small market capitalization (the value of the tradable shares of the company).

Spousal IRA

An individual retirement account set up in the name of a spouse who receives little or no income.

Stock

An ownership share in a corporation. Each share represents a piece of the corporation’s assets and earnings. Stockholders are usually entitled to vote at shareholder meetings and receive dividends.

Stock dividends

Dividends paid out in the form of shares of the company’s stock rather than cash. Stock dividends are not taxed until the shares are sold.

Stock exchange

A market for buying and selling stocks. The major U.S. exchanges are the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX).

Stop-loss order

An arrangement where you instruct the broker to automatically sell a stock if it drops to a certain price.