I wanted to (finally) give you a money dictionary that doesn’t require a dictionary to understand the word’s definition. That doesn’t exist . . . so I made my own. You know how you explain a term to a friend who doesn’t “get” it? That’s the way it’s written here. Let this glossary be your go-to guide for definitions with a practical perspective whenever you need a little cheat-sheet. Some stuff changes over the years, but these basics never go out of style.
GDP: Stands for gross domestic product and is a way for economists to measure the strength of a particular economy. For example, US GDP looks at the total market value of all goods and services produced within the US, from cars to appliances to clothes to shoes. When US factories produce a lot, it usually means the economy is healthy because they have buyers for their products, and GDP will increase. When factories slow down production, it means there are fewer buyers, and GDP will decrease.
Going Public -
What happens when a privately held company has an Initial Public Offering (IPO), where it sells shares to outside investors for the first time.
Golden Parachute -
A contractual guarantee that an executive at a company will get hooked up with stock options and other perks even if they get fired.
The value of an organization’s reputation. Like your own, it’s priceless.
Google AdWords -
Google’s online advertising program, which features tutorials about targeted online marketing and tools for creating ads and tracking traffic. Kind of like your analytics dashboard, only for advertising (and making money!).
Green Mortgage -
Green Mortgage: A mortgage that sets money aside for home improvements that will increase the energy efficiency (and ultimate resale value) of the home. You can get one of these when you are buying a new house or refinancing a house you already own. A certified home energy rater visits your house and suggests improvements to make it more energy efficient; once you have made the improvements, the mortgage lender repays the expenses back to you. (See also: Mortgage)
Gross Income -
How much money you make before taxes. The salary you agreed to in your company’s offer letter is typically in gross income, so before accepting a job offer, you should factor in taxes to get the amount you will actually be taking home each paycheck. (See also: Net Income)
Gross Margin -
Subtract the cost of making something (manufacturing, etc.) from the revenue you get from that product, aka the markup, and voilà! Gross
Growth Stocks -
Growth Stocks: These stocks tend to be new and buzzy, and are growing faster than the average company. Growth companies tend not to pay dividends, as they’re re-investing their earnings back into their growing businesses. While you don’t get your money back right away, the long-term money you stand to make is typically pretty good. Growth stocks are especially common in certain industries (like technology and biotech). An example would be Twitter, which tends to bounce around a lot, versus a value stock like Johnson&Johnson, which is more reliable. (See also: Value Stocks)