The financial world has its own shorthand, and the more you understand these terms, the easier it can be to make informed financial decisions. Here are some common acronyms and their meaning.

401(k): A 401(k) is a company-sponsored retirement account that allows employees to save for retirement by contributing a percentage of their income. Employers may offer matching contributions.

403(b): Similar to a 401(k), a 403(b) is a retirement account that allows employees to save for retirement by contributing a percentage of their income. The difference is that 403(b)s are typically for employees of tax-exempt organizations like public schools and nonprofits.

AGI: Adjusted gross income is an abbreviation you likely see every year during tax season. It’s a number that the Internal Revenue Service (IRS) uses to determine how much income tax you owe. AGI is calculated by taking your total (or gross) income for the year and deducting certain items, like educator expenses, student loan interest, alimony payments, and self-employment taxes.

APR: Comparing lenders for a mortgage or car loan? Pay more attention to the annual percentage rate (APR) than the interest rate. APR shows you interest plus fees and other charges, which can add up.

Tip: APR affects student loans as well, so take time to investigate your options and make sure you’re saving enough for college.

CAGR: Compound annual growth rate is the rate of return you’ll get on an investment because of compounding or reinvesting the profits over the lifespan of the investment. You can think of compounding as a wealth-building tool. Imagine a small snowball rolling down a steep hill. The longer it rolls, the more snow it accumulates. Your original investment can grow by accumulating earnings on top of earnings over time.

Tip: Start saving early and remember your tax burden also compounds, so plan accordingly.

CPI: The Consumer Price Index is a measure of inflation. It measures the monthly change in prices paid by U.S. consumers for goods and services.

ETF: An exchange-traded fund is an investment vehicle that pools a group of assets into one fund. It can be bought and sold on an exchange like an individual stock.

FDIC: The Federal Deposit Insurance Corporation is an independent U.S. government agency that insures bank deposits and examines financial institutions for safety and soundness. When you deposit money in a savings or checking account, FDIC insures that money against loss due to bank failure up to $250,000.

FICO: Short for Fair Isaac Corporation, FICO is commonly used by lenders to evaluate creditworthiness, most often represented as your credit score.

Tip: To help raise your FICO score, pay your bills on time and avoid carrying high balances on credit cards.

HNWI: High-net-worth individuals are generally those with over $1 million in liquid financial assets, though this amount may vary by financial institution.

HSA: A Health Savings Account allows you to deposit money from your paycheck and withdraw it tax-free for qualified medical expenses. Unused funds roll over year to year and can be invested to help cover future healthcare costs.

IPO: An initial public offering is the first time a private company sells shares of its stock to the public, allowing it to raise capital and transition from private to public ownership.

IRA: Individual retirement accounts are a popular way to save for retirement. Social Security alone may not be enough, so an IRA provides an additional savings option.

Tip: An IRA is only part of the equation. Securing guaranteed income in retirement can help you retire with more confidence.

LLC: A limited liability corporation is a common business structure that protects owners from certain liabilities while allowing profits and losses to pass through to personal income taxes.

RMD: A required minimum distribution is the minimum amount you must withdraw annually from certain retirement accounts starting at age 73. Failure to withdraw can result in tax penalties.

ROI: Return on investment measures the profitability or benefit earned on money you’ve invested.

TCO: Total cost of ownership reflects the full cost of owning an asset, including maintenance, upkeep, and service costs beyond the initial purchase price.

If you need help understanding any of these acronyms or have questions about your financial situation, please don’t hesitate to reach out. I’m always happy to help.

DISCLAIMER: This material is intended for general public use. By providing this content, The Guardian Life Insurance Company of America and its affiliates are not providing advice or acting in a fiduciary capacity. Please contact a financial representative for guidance specific to your situation.

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