A type of defined contribution plan that is designed for certain employees of public schools and other tax-exempt organizations. Examples of 403(b) plan participants may include teachers, school administrators, professors, government employees, nurses, doctors, and librarians. This type of plan allows participants to save money for retirement through payroll contributions, as well as for the employer to match part of the employee's contribution. It is very similar to a 401(k) plan.
Characteristics academically and/or empirically linked to higher returns over a particular time horizon. Extensive in diversity and efficacy, factors fall within many categories, with the most common being macroeconomic, like inflation rate, GDP growth, and unemployment rate; fundamental, like style, size, and quality; and statistical, like momentum. Investment strategies that incorporate factors can focus on a specific factor or can capture a variety of factors to enhance diversification.
A person appointed by an outside party to manage "the personal affairs of the child, elderly person, or incapacitated individual such as medical needs, nutrition, rent, and transportation." Guardians are usually named in the will(s) of a parent or other current guardian. Some guardians are named or appointed by a court if a close family member or next of kin is unavailable or has not previously been designated in writing. Designating a Guardian you approve of is important because they may be responsibile for making decisions around medical procedures, education, or where to live.
A distribution taken from a qualified retirement plan when the account owner is not otherwise eligible to take a distribution due to an unforeseen and costly life event. The plan must allow hardship distributions, and only the amounts that the employee originally contributed (excluding any earnings) and employer match and profit-sharing contributions may be withdrawn. The funds may not be re-contributed to the plan in the future, will be subject to income tax, and may be subject to a 10% penalty tax on early distributions. A few readily acknowledged hardships include medical expenses, funeral expenses, the purchase of a primary residence, and the repair of a primary residence.
A diversified mix of investments following an asset allocation appropriate for the length of time until the money will be needed to pay for the projected goal. Common examples are retirement target date funds and education target date funds. The asset allocation changes over time as the "target date" gets closer. Often, these funds take advantage of larger growth opportunities in the earlier years, favoring riskier investments like stocks and real estate, while the goal is still many years away. As the goal, or "target date," approaches, the asset allocation tends to shift towards less risky investments like cash and bonds.
A bond that derives its return solely from the difference between its purchase price and its face value at maturity. Because the debt does not pay interest, it typically trades significantly cheaper than its face value, so that the investor has the opportunity to profit when the bond matures at face value.