1492 terms

Glossary

Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.

Showing 2 terms

Guaranteed return

Market basics

A return that is certain rather than expected — most commonly the interest avoided by repaying a loan ahead of schedule.

In plain terms

Treating a guaranteed 8.8% and a hoped-for 12% as two numbers on the same scale is the core error in the prepay-or-invest question. Avoided interest also carries no tax and no sequence risk.

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Endowment policy

Market basics

Also called: Money-back policy

A traditional life policy combining modest cover with a low, largely guaranteed return.

In plain terms

A poor bond with a little cover attached. Returns land near 4–5%, which inflation removes.

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