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.
M & A -
M & A: Stands for mergers and acquisitions. A merger is like a marriage in the business world. Sometimes two companies will merge to form one large company; it’s wanted by both parties, rarely arranged and mutually beneficial. An acquisition can be friendly (when management approves) or hostile (when management can’t agree on a merger or takeover and things get ugly. Either way, an acquisition is when a company takes over, or acquires another company). There can also be divorces, like the high profile one between AOL and Time Warner.
Macroeconomics: The study of economics that focuses on the performance of the economy in general, from unemployment to GDP stuff like milk over time to come up with overall spending trends for the entire country. (See also: Microeconomics)
The difference between the cost of making something and the price it’s sold for. In other words, it’s the markup.
Market Share -
The percentage of a market a business holds, such as iTunes’s 64% market share of digital music downloads.
Mass e-mail Senders -
There are two kinds: Free software allows you to send bulk e- mail and track which recipients opened it so you know who’s read your
note. Paid services also allow you to track people who unsubscribe and or click through any links inside the e- mail, which is a good way of telling if your e-mail was persuasive in getting recipients to do what you wanted them to do.
Maturity Date -
Maturity Date: When a bond you’ve purchased pays you the final interest payment and gives you your principal back. At that maturity date, you essentially get repaid for the loan you gave to the company or municipality you invested in, in addition to the interest you received.
Someone you know or just someone whose path or career or work ethic or vision you admire and inspires you to follow a similar path to achieve your own goals.
Microeconomics: The study of economics that looks at individual household or company spending or saving data to gather overall trends, like determining what types of things people are buying. (See also: Macroeconomics)
Minimum Viable Product -
A product which has just enough features to gather valuable insights from customers while still in development, aka while in the
beta version of that product. You often see this with the initial launch of a smartphone app: the simpler version comes out first, then once the company has seen how it does and worked out the kinks, a fancier (and often more expensive) version of the app follows. Also known as MVP (not the most valuable player . . . because that, of course, is you.)
Mission Statement -
A statement that defines your or your company’s goals.
Mom-and-Pop: You and anyone else who isn’t an institutional inves- tor. Sometimes called “mom-and-pop retail,” the term refers to the average folks in the street and their actions in the market, and is often used to differentiate the actions of normal people from more sophisticated investors. (See also: Institutional Investors)
A Boss Bitch mom who runs a business from home while raising her family.
Monetary Policy -
Monetary Policy: Policy that sets and controls interest rates. In the US, it’s the job of the Federal Reserve. Don’t confuse this with “fiscal policy”—it’s not the same thing and the terms aren’t interchange- able. “Fiscal” policy refers to the actions of the government (taxes, etc.), not the Fed.
Money Market Account -
Money Market Account: It’s similar to a regular savings account, but it usually gives you a better rate because you are letting the bank be more aggressive with what they do with your money. With a regular savings account, the bank can’t invest your money, but they can with a money market account. For that privilege, they give you a bit more interest in return.
Mortgage: A loan used to buy real estate in which the real estate is collateral for the loan. Interest is typically paid monthly. In the US, the standard, plain vanilla mortgage is the thirty-year-fixed, in which the borrower makes 360 (one per month) equal payments. After that, the loan is paid off. This kind of loan has a fixed rate for the life of the loan and is amortized—that is, each payment contains some principal repayment, so that the loan balance declines to zero over time. In practice, most thirty-year borrowers pay off their loans early, usually because they sell their houses. (See also: ARM, FRM)
Municipal Bond -
Municipal Bond: A bond issued by a city, county or state. “Muni” bonds (as they’re often called) are popular investments with individual investors, because in most cases the interest they pay is not subject to federal income tax. Within the state of issue they’re also not subject to state income tax, so many muni investors opt for homegrown bonds.
Mutual Fund -
Mutual Fund: Instead of just buying individual companies, a mutual fund is a basket of a bunch of different securities: stocks or bonds. Anyone can buy into a mutual fund, and it has a low barrier to entry compared with a hedge fund. It’s basically built-in insurance for investing because it’s diversified, so if one stock fails, you are (usually) propped up by another company in the fund to keep your returns slow and steady. And because you are pooling money with other people, you get exposure to a bunch of different investments you wouldn’t have the opportunity to buy into on your own.