FinancialAha glossary
Check out some of the terms we use when we talk about FinancialAha.
Financial data
Financial data refers to the data included in your portfolios. This is data that you manually enter in the FinancialAha app. FinancialAha has no link to your real financial data from your financial accounts such as bank accounts or credit cards.
Income
Money earned or received from sources such as employment, investments, rental properties, or other sources.
Expenses
Money spent or paid out for goods, services, bills, or other financial obligations.
Savings
Money set aside or reserved for future use, typically in a savings account or investment vehicle.
Interest
The cost of borrowing money or the return earned on investments, expressed as a percentage of the principal amount.
Investment
The purchase of assets or securities with the expectation of generating income or achieving capital appreciation over time.
Net Worth
Net worth is a measure of an individual's financial position, calculated by subtracting their liabilities (debts or obligations) from their assets (valuable resources or possessions). In essence, net worth represents the value that remains after all debts have been paid off. It provides a snapshot of an individual's or organization's financial health and indicates their overall financial stability and wealth.
Assets
Assets refer to any valuable resources or possessions owned by an individual that have economic value and can be converted into cash. Assets can include various types of financial instruments, properties, investments, and tangible items such as real estate, stocks, bonds, cash, vehicles, equipment, and valuable possessions like jewelry or artwork.
Liabilities
Liabilities represent any debts or financial obligations owed by the individual or entity, such as mortgages, loans, credit card debt, and other outstanding payments.
Debt
Money owed to creditors or lenders, typically in the form of loans, credit card balances, mortgages, or other liabilities.
Cash Flow
Cash flow refers to the movement of money into and out of an accounts over a specific period of time. It represents the inflow and outflow of cash and cash equivalents, including revenue, expenses, investments, and financing activities.
Cash Out
Cash out describes the process of converting assets or investments into cash, providing liquidity for the asset holder.
Liquidity
Liquidity refers to the ease with which an asset or investment can be converted into cash or its equivalent without significantly affecting its market price. It is a measure of how quickly and easily an asset can be bought or sold in the market with minimal impact on its value.
Tax
Mandatory payments imposed by governments on income, property, goods, or services, used to fund public services and infrastructure.
Inflation
The rate at which the general level of prices for goods and services rises over time, eroding purchasing power.
Projection
Financial projections are estimates or forecasts of the future financial performance. These projections provide insight into expected revenues, expenses, profits, cash flows, and other key financial metrics based on anticipated activities, market conditions, and strategic initiatives.
Diversification
Spreading investments across different asset classes, industries, or geographic regions to reduce risk.
Compound Interest
Interest calculated on the initial principal and the accumulated interest of previous periods, resulting in exponential growth over time.
Asset Allocation
The distribution of investments among different asset classes, such as stocks, bonds, and cash, to achieve a desired risk-return profile.
Asset Management
The management of investments, assets, and financial affairs to achieve specific financial goals and objectives.
Return on Investment (ROI)
ROI measures the profitability of an asset relative to its cost. It is calculated as the gain or loss generated from an investment divided by the initial cost of the investment, expressed as a percentage.
Annualized Rate of Return (ARR)
ARR represents the average annual growth rate of an investment. It is calculated using the last value and initial cost of the investment, along with the time period, and expresses the growth rate as an annualized percentage.
Depreciation
The decrease in value of assets over time due to wear and tear, obsolescence, or other factors.
Retirement
The period of life when an individual stops working and relies on accumulated savings, investments, or pension income for financial support.
Cost of Living
The amount of money required to maintain a certain standard of living, including expenses such as housing, food, transportation, and healthcare.
Financial Independence
A state in which an individual or household has sufficient financial resources and assets to cover their living expenses and achieve their financial goals without relying on employment or active income from work. It signifies the ability to sustain one's desired lifestyle and meet financial obligations through passive income streams, investments, and savings.