The 20 Basic Financial Acronyms You Should Know & Understand

By Myles Leva


Last Updated: March 16, 2022


The world of financial terminology can be confusing at first. Finance terms are confusing enough, so what do you do when you see a new acronym?

The truth is that most financial acronyms are quite simple, and there aren’t that many that you need to know.

However, there are some financial definitions that will become relevant to you at some point. So, let’s go over the financial acronyms you should understand for the financial activities most people need to engage in at some point.


A Finance Abbreviation List

Here are the financial terms that you:

  • Are most likely to see
  • Are the most important to the average American


AIR - Assumed Interest Rate

This is the interest rate used to help determine the value of an annuity contract. It’s a rate selected by insurance companies that is relevant to anyone investing in annuities. It determines the monthly payments investors are entitled to.


APR - Annual Percentage Rate

The percentage-based cost for borrowing money, except it’s annualized. APRs are used to broadly measure the annualized costs for any kind of loan.


ARM - Adjustable-Rate Mortgage

The initial interest rate for an adjustable-rate mortgage. Of course, the rate can potentially increase up to the annual ARM cap.


CD - Certificate of Deposit

A Certificate of Deposit is a financial instrument offered by banks and credit unions. The investor agrees to leave their money with the lender for a specified timeframe. In return, the bank pays the borrower back at a pre-determined interest rate.

CDs are a low-risk, low-reward investment option. It’s almost impossible to lose money on them as they are a form of guaranteed income insured by the Federal Government.


EFT - Electronic Funds Transfer

The typical electronic transfer of funds from one bank account to another. It can imply intra-bank or inter-bank transfers.


ETF - Exchange Traded Funds

A common financial instrument. A fund containing many individual securities, but which is listed and traded on a regular stock exchange.


FDIC - Federal Deposit Insurance Corporation

The independent Federal institution responsible for maintaining confidence in the US financial system. They provide deposit insurance, supervise financial institutions, and complete several other regulatory responsibilities.


FOREX - Foreign Exchange

The exchange of currencies (ex. USD to CAD, CAD to EUR, etc.). Some people engage in FOREX trading as a profession, while many individuals and institutions exchange one currency for another for personal, business, or investment purposes.

The FOREX market determines currency exchange rates.


FRB - Federal Reserve Board

The board overseeing the operations of the Federal Reserve System. The board makes decisions on a wide range of financial issues.


GNP - Gross National Product

The total value of all final goods and services sold within a national economy within a specified period of time. GNP is measured annually, and critically, it is computed before factoring in the depreciation or consumption of capital used in the processes of production.


IRA - Individual Retirement Account

A tax-advantaged retirement account in the US. The specific tax advantages depend on the type of IRA that is opened (traditional vs Roth IRA, etc.).


LOI - Letter Of Intent

A legal document outlining the understanding two parties have prior to the negotiation and formalization of the final details.


MMKT - Money Market

A financial market for the trading of short-term debt instruments. Examples include treasury bills, or even money market mutual funds. Money market investments are highly liquid and are generally safe investments.


NAV - Net Asset Value

A metric measuring the value of an individual or institution’s value. NAV is equal to all assets minus all liabilities. For example, if your company has $1,000,000 is assets, but $100,000 in liabilities, it’s NAV is $900,000.


NYSE - New York Stock Exchange

By far the largest stock exchange in the world (by market capitalization). Located in Manhattan, companies listed exceed $30 trillion.


PSP – Profit-Sharing Plan

An employer-sponsored retirement plan that provides employees with shared in the company. They thus get paid according to company profits, based on quarterly or annual earnings.


REIT - Real Estate Investment Trust

Companies that either own or finance income-producing real estate. However, these companies must meet some requirements to qualify as REITs. You can find most REITs listed on stock exchanges.


SEC - Securities Exchange Commission

The independent Federal Government agency that enforces securities laws. It was formed after the 1929 crash to regulate the securities markets and fight manipulation.


TSA - Tax-Sheltered Annuity

A retirement plan specifically offered by public schools and some other organizations exempted from 501(c)(3) taxes. Employees and employers can both contribute to individuals’ accounts.


YTM - Yield To Maturity

The anticipated returns on a bond, assuming it is held until its maturity.



The world of finance is full of acronyms. But with this financial acronyms list and perhaps a few more in the back of your head, you can make more sense of the financial system and how it affects you.

Photo by Oren Elbaz on Unsplash


Leave a Reply

Your email address will not be published. Required fields are marked *

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


Subscribe for daily financial content

Daily articles, financial messages and affirmations to best help you navigate your financial future.