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GLOSSARY
Swap
A swap is an agreement between two parties to trade streams of cash flow generated by two different financial instruments. This would be done to reduce or offset exposure to one factor, such as fixed interest rates or adjustable interest rates. When a swap involves interest rates, the two parties agree to exchange cash flows related to specified rates and a specified principal amount, but they don't actually exchange the principal. Swaps can also involve two different currencies, where the parties are interested in reducing their exposure to certain foreign currency fluctuations.
Sweat equity
It is a process where the future homeowner actually contributes to the construction of his home and thus accrues equity on his home.
Sweep account
Sweep account is a deposit account that automatically transfers all or some of the cash on deposit into another, high-yield account. Brokerages typically offer this service, where all cash not invested in securities is automatically transferred into a money market fund or similar instrument.
Swing loan
Swing loan is a short-term debt obligation that has a defined payoff source, such as a refinance to a long-term loan. Swing loans are also called bridge loans, or bridge financing.
Synthetic ID fraud
Synthetic ID fraud is a credit/identity scam that involves creation of new, fictional identities. The criminals will often combine made-up information with a real Social Security number to create the new identity.
Synthetic lease
Synthetic lease is an operating lease that's not recorded on the balance sheet as a liability, but is instead treated as an expense. The leased property is also not recorded on the balance sheet. Synthetic leases also allow the lessee to realize certain tax advantages that are normally associated with capitalized property or equipment, such as accelerated depreciation deductions included in the lease payments.
Systematic withdrawal plan - SWP
Systematic withdrawal plan, or SWP, is a mutual fund account feature that automatically withdraws funds from the account at regular intervals, and pays those funds out to the accountholder. An individual on a fixed income might benefit from SWP, as would someone who needs to meet mandatory retirement plan withdrawal requirements.
Systematic withdrawal schedule
Systematic withdrawal schedule is a means of taking money out of an annuity account; the annuitant makes withdrawals of specific amounts at regular intervals until the account value has been depleted. A systematic withdrawal schedule does not guarantee the annuitant lifetime payments.
T (tiered)
T (tiered) is a notation in some interest rate tables that indicates a varied pricing structure. Usually the rate noted is the lowest rate available.
Tactical asset allocation - TAA
Tactical asset allocation, or TAA, is an investing strategy that involves keeping certain percentages of total capital invested in specific asset classes. Because each investment will perform differently over time, the investor must periodically review the allocation of invested capital, rebalancing the positions to the desired percentages of the total portfolio. In some cases, the investor may wait to rebalance the portfolio to achieve certain short-term growth objectives.
Tangible personal property
Assets outside of real estate that you can put your hands on. Examples may include business equipment, and vehicles.
Tax and penalty-free withdrawals
Tax and penalty-free withdrawals are qualified transactions that remove money from an IRA without incurring taxes or fines. Prior to retirement, individuals are allowed to withdraw money from an IRA under certain circumstances, such as to pay for the costs of higher education.
Tax avoidance
Tax avoidance is the practice of using legal methods to minimize income taxes. Taxpayers might pursue various levels of tax avoidance, such as contributing pretax earnings to retirement accounts, purchasing tax-free municipal bonds, or making qualified charitable contributions.
Tax bracket
Different levels of income are taxed differently; your income determines what bracket you are in.
Tax certificate ID
Tax certificate ID is a series of identifying digits that's issued to a business by the state for the purposes of collecting sales tax.