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Glossary

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There are 4 names in this directory beginning with the letter T.
Target Date Funds
Target Date funds are types of funds that provide a diversified portfolio of equities and bonds that is rebalanced over some time period. The asset allocation of the fund initially begins with a diversified portfolio that is more heavily weighted towards equities and has higher risk tolerance, which then rebalances over time to be more conservative and fixed-income weighted as the target date of the fund approaches.

This fund is popular with 401(k) investors who like the autopilot nature of the fund that rebalances risk and asset allocation of equities and fixed-income from aggressive to more conservative weighing automatically as their retirement date approaches. Watch Video

 

Time Value of Money
The time value of money (TVM), also known as a present discounted value, is an idea that a dollar today is worth more than the same dollar in the future due to its potential earning capacity. The principle behind this idea is that since money can earn interest, the dollar in present will earn more in interest than the same dollar in the future, thereby making the present value worth more in the future. Watch Video

 

Tracking Error
Tracking Error is the difference between the return that investors receive from an investment and the return of the benchmark that they were trying to imitate. Tracking error sometimes presents itself in the return of a mutual fund or ETF that does not return the expected return of its benchmark, thereby creating an unexpected loss or profit.

 

Treasury Bill/Bond/Note
Treasury bills, treasury bonds, and treasury notes are all fixed-income securities issued by the government. They are considered safe, steady and risk-free investments compared to other securities because they are backed by the full faith and credit of the United States government.

Of the three securities, Treasury bills, also known as T-bills, have the shortest maturity ranging from 4 weeks to 1 year. Treasury notes, also known as T-notes, have a maturity period ranging from 2 and 10 years and pay interest semi-annually as coupon payment. Treasury bonds, also known as T-bonds, have the longest maturity ranging from 10 years to 30 years, pay interest as coupon payment semi-annually. and have the highest interest rate of the three securities.