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safety of principal

Safety of principal is an objective that emphasizes the security of the invested principal.

salary reduction simplified employee pension (sarsep)

A SARSEP is a simplified alternative to a 401(k) plan. It is a SEP that includes a salary reduction arrangement. Under this special arrangement, eligible employees can elect to have the employer contribute part of their before-tax pay to their IRA. This amount is called an "elective deferral".

SEC

The main regulatory body regulating the securities industry is called the Securities and Exchange Commission.

second mortgage

A mortgage on real property in a junior position to a primary or first mortgage. The increased risk associated with a second mortgage is often reflected in a higher interest rate and a shorter term of repayment.

securities

Stocks and bonds are traditionally referred to as securities. More specifically, stocks are often referred to as "equities" and bonds as "debt instruments."

Securities and Exchange Commission

The main regulatory body regulating the securities industry is called the Securities and Exchange Commission.

short position

A short position in an investment indicates a position in an investment that would increase in value as the underlying asset(s) decrease in value. Opposite of a long position.

short sale

The sale of stock that you do not yet own in order to take advantage of an expected share price decline. If the stock declines in price, the stock is purchased at the now lower price and the short position is closed.

simplified employee pension (sep)

A SEP provides employers with a "simplified" alternative to a qualified profit-sharing plan. Basically, a SEP is a written arrangement that allows an employer to make contributions towards his or her own and employees' retirement, without becoming involved in a more complex retirement plan. Under a SEP, IRAs are set up for each eligible employee. SEP contributions are made to IRAs of the participants in the plan. The employer has no control over the employee's IRA once the money is contributed.

small cap

A small cap stock is one issued by a company with less than $1.7 billion in market capitalization.

smart card

A card with an embedded computer chip which stores more information, performs more functions and is more secure than a credit card or debit card.

spousal ira

An individual can set up and contribute to an IRA for his/her spouse. This is called a "Spousal IRA" and can be established if certain requirements are met. In the case of a spousal IRA, the individual and spouse must have separate IRAs. A jointly owned IRA is not permitted.

stock

Stock certificates represent an ownership position in a corporation. Stockholders are often entitled to dividends, voting rights, and financial participation in company growth.

stock dividends

The investor's share of the income earned by the company issuing the stock.

stock exchange

A market for trading of equities, a public market for the buying and selling of public stocks.

stop-loss order

This is when you tell your broker to sell the stock if it drops to a certain price.

succession planning

Planning for a business to pass to the next generation of owner/managers.

surrender value

When a policy owner surrenders his/her permanent life insurance policy to the insurance company, he or she will receive the surrender value of that policy in return. The surrender value is the cash value of the policy plus any dividend accumulations, plus the cash value of any paid-up additions minus any policy loans, interest, and applicable surrender charges.