Glossary.

An employer-sponsored retirement savings plan. Contributions reduce current taxable income (Traditional) or come from after-tax income (Roth). Many employers match contributions.

Similar to a 401(k) but offered by non-profit organizations, schools, and certain government entities. Shares contribution limits with a 401(k).

A tax-advantaged savings account for education expenses. Contributions grow tax-free and withdrawals for qualified education expenses are tax-free. Under SECURE 2.0, unused funds can be rolled into a Roth IRA subject to limits.

A tax election that allows you to recognize income on restricted stock at the time of grant rather than vesting. Must be filed with the IRS within 30 days of grant. Can save substantial taxes if the stock appreciates significantly. verify×DON'T TRUST, VERIFYClaim: An 83(b) election must be filed with the IRS within 30 days of the property transfer.Verify at: IRS Notice 2012-29 ↗IRC Section 83(b) and its implementing guidance set the 30-day filing window.

Deductions subtracted from gross income before calculating adjusted gross income (AGI). Available even if you take the standard deduction. Examples: student loan interest, IRA contributions, HSA contributions.

Your total gross income minus above-the-line deductions. AGI determines eligibility for many deductions, credits, and account contribution limits.

Any cryptocurrency other than Bitcoin. Most have unlimited or adjustable supply and centralized development teams.

The process of paying off a loan through regular payments that cover both principal and interest. Early payments go mostly to interest. Later payments go mostly to principal.

The yearly cost of borrowing money, expressed as a percentage. Does not include compounding within the year. Credit card APRs are typically 20 to 30 percent. verify×DON'T TRUST, VERIFYClaim: Credit card APRs typically run 20 to 30 percent.Verify at: Federal Reserve G.19 consumer credit ↗The G.19 series publishes average credit card interest rates. Recent prints have been in the low-to-mid 20s percent.

The effective annual return on a savings account or investment, accounting for compounding. Higher than the APR on the same nominal rate when interest compounds more than once per year.

The distribution of investments across different asset classes (stocks, bonds, Bitcoin, cash). Your allocation should reflect your time horizon and risk tolerance.

The strategy of placing tax-inefficient assets in tax-advantaged accounts and tax-efficient assets in taxable accounts to minimize tax drag.

A method of contributing to a Roth IRA when your income exceeds the direct contribution limit. You contribute to a Traditional IRA (non-deductible) then convert it to Roth.

One hundredth of one percent (0.01 percent). Used to describe small changes in interest rates or fees. 50 basis points equals 0.5 percent.

The person or entity you name to receive an account or policy upon your death. Beneficiary designations override your will and take effect immediately.

Bitcoin Improvement Proposal 39. The standard that converts a wallet's private key into a human-readable list of 12 or 24 words (your seed phrase).

A decentralized digital currency with a fixed supply of 21 million coins. No central issuer, no supply inflation, and no counterparty required for transactions. verify×DON'T TRUST, VERIFYClaim: Bitcoin's total supply is capped at 21 million coins.Verify at: bitcoin.org FAQ ↗Hardcoded in Bitcoin Core consensus rules. Enforced by every node independently.

A monetary system in which Bitcoin serves as the base layer of money, the reserve asset against which other things are valued. Analogous to the gold standard.

A batch of Bitcoin transactions grouped together and added to the blockchain. A new block is added approximately every 10 minutes.

A chain of blocks. The permanent, public record of every Bitcoin transaction ever made. No single party controls it.

A loan made to a government or corporation that pays a fixed interest rate over a set period. Lower risk than stocks but lower expected return.

The 1944 international agreement that tied global currencies to the US dollar and the dollar to gold at $35 per ounce. Ended in 1971 when Nixon decoupled the dollar from gold.

A parallel federal tax system designed to ensure high-income taxpayers pay a minimum amount of tax. You compute regular tax, then compute AMT, then pay the higher of the two. Common AMT triggers: incentive stock option (ISO) exercise, large state and local tax deductions before SALT cap, and high deductions relative to income.

The observation that newly created money benefits those who receive it first, financial institutions and large corporations, before prices rise. Those who receive it last, wage earners, buy at already-inflated prices.

Tax on the profit from selling an asset that has appreciated. Short-term gains (assets held under one year) are taxed as ordinary income. Long-term gains (over one year) receive preferential lower rates.

The loss from selling an asset below its purchase price. Capital losses offset capital gains dollar for dollar and can offset up to $3,000 of ordinary income per year. verify×DON'T TRUST, VERIFYClaim: Capital losses can offset up to $3,000 of ordinary income per tax year, with excess losses carried forward.Verify at: IRS Topic 409 ↗The $3,000 annual cap on net capital loss against ordinary income is set in IRC Section 1211 and reflected in IRS Topic 409.

The difference between money coming in and money going out. Positive cash flow is the prerequisite for wealth building.

Renting mining hardware from a third party instead of owning it. You pay upfront, they run the machines, and you receive whatever output the rented hashrate produces minus fees. The contract expires worthless. See Cloud Mining →

Continuation of health insurance coverage after leaving an employer. You pay the full premium (both employee and employer share). Coverage continues for up to 18 months in most cases. verify×DON'T TRUST, VERIFYClaim: COBRA continuation coverage runs up to 18 months for most qualifying events.Verify at: DOL COBRA ↗Department of Labor guidance lists 18 months as the standard duration for continuation coverage after termination or reduction in hours.

Keeping Bitcoin on a hardware wallet or other device that is not connected to the internet. The safest method for long-term Bitcoin storage.

A Bitcoin-only hardware wallet made by Coinkite. Widely considered among the most security-focused options available thanks to open-source firmware and air-gapped signing via microSD or NFC.

Interest earned on both the principal and the previously accumulated interest. The mechanism that turns small consistent investments into large balances over time.

The Bureau of Labor Statistics' measure of price changes for a basket of consumer goods and services. The most widely cited inflation measure, though criticized for underweighting housing costs. verify×DON'T TRUST, VERIFYClaim: CPI is compiled monthly by the US Bureau of Labor Statistics using a fixed basket of goods and services.Verify at: BLS CPI home ↗The BLS CPI home page documents methodology, weights, and release schedule.

What you originally paid for an asset. Used to calculate capital gains when you sell. Inherited assets receive a stepped-up basis to fair market value at the date of death.

The total amount needed to cover basic expenses in a given location: housing, food, transportation, healthcare.

A restriction placed on your credit file that prevents new credit from being opened in your name. Free at all three major bureaus since 2018. verify×DON'T TRUST, VERIFYClaim: Credit freezes have been free at all three major bureaus since 2018.Verify at: FTC on credit freezes ↗The Economic Growth, Regulatory Relief, and Consumer Protection Act (2018) mandated free credit freezes at Equifax, Experian, and TransUnion.

A number (300 to 850) representing your creditworthiness based on payment history, use, length of history, credit mix, and new inquiries.

The percentage of available revolving credit you're currently using. Under 30 percent is generally good. Under 10 percent is ideal for maximizing your credit score.

The study of how psychology affects financial decisions. It documents systematic ways humans deviate from rational behavior with money: loss aversion, recency bias, mental accounting, sunk cost fallacy, and others. Recognizing your own biases is the practical use; you cannot reason your way out of biology, but you can build systems (automatic transfers, written rules, fixed asset allocation) that protect you from yourself.

The debt payoff strategy of targeting the highest interest rate debt first regardless of balance. Minimizes total interest paid. Mathematically optimal versus the debt snowball.

The debt payoff strategy of targeting the smallest balance first regardless of interest rate. Produces quick psychological wins but costs more in total interest than the avalanche method.

Your total monthly debt payments divided by your gross monthly income. Lenders typically require a back-end DTI under 43 percent to qualify for a mortgage. verify×DON'T TRUST, VERIFYClaim: Most conventional mortgage lenders cap back-end DTI at roughly 43 percent.Verify at: CFPB on DTI ↗The CFPB explainer identifies 43 percent as a common ceiling for qualified mortgage standards.

In Bitcoin: the absence of any single party that controls the ledger, the rules, or the money supply. A description of who controls the protocol, not who holds coins.

Tax that is owed but not yet paid. Traditional IRA and 401(k) contributions are tax-deferred. You pay ordinary income tax when you withdraw.

A pension plan where retirement income is calculated by a formula using years of service and final salary. The employer bears the investment risk.

A retirement plan (like a 401(k)) where contributions are defined but the retirement benefit depends on investment performance. The employee bears the risk.

A general decrease in price levels. Can occur from increased productivity (good deflation) or collapsed demand (bad deflation).

Insurance that replaces a portion of your income if you cannot work due to illness or injury. Own-job coverage pays if you can't do your specific job.

Spreading investments across different assets to reduce the risk that any single investment's decline severely damages your portfolio.

Investing a fixed dollar amount on a regular schedule regardless of price. Reduces the risk of investing a lump sum at a market peak.

A program that automatically reinvests dividend payments into additional shares of the same stock or fund. Available at no cost at most major brokerages. Dividends reinvested via DRIP in taxable accounts are still taxable in the year received.

Income from work: wages, salary, tips, self-employment. Distinct from passive income and investment income for tax purposes.

Your total tax paid divided by your total income. Always lower than your marginal rate because lower brackets apply to lower portions of income.

Liquid savings covering 3 to 6 months of fixed expenses, kept separate from investments. The financial buffer that converts a crisis into a temporary inconvenience.

Money your employer contributes to your 401(k) when you contribute. Typically 50 to 100 percent of your contribution up to a percentage of salary. Capturing the full match is a guaranteed 50 to 100 percent return on the matched portion.

Company stock or stock options given to employees as part of compensation. Includes RSUs, ISOs, and NSOs.

Organizing your assets and legal documents so they transfer correctly at death. Includes wills, trusts, beneficiary designations, and healthcare directives.

The cutoff date to own a stock to receive its upcoming dividend. If you purchase on or after the ex-dividend date, you do not receive that dividend. Relevant for qualified-dividend holding period calculations.

The annual fee charged by a mutual fund or ETF as a percentage of assets. A 0.03 percent ratio costs $3 per year on a $10,000 investment. Compound over 40 years and a 1 percent ratio costs roughly 28 percent of your ending portfolio versus a near-zero-cost fund. verify×DON'T TRUST, VERIFYClaim: At a 7 percent annual gross return over 40 years, a 1 percent fund fee erodes roughly a quarter to a third of the ending portfolio relative to a near-zero-fee benchmark.Verify at: SEC mutual fund analyzer ↗Run the analyzer at 7 percent gross return, 40 years, 1 percent versus 0.03 percent expense ratio. The ending-balance gap falls near 25 to 30 percent.

A charitable giving account where you make an irrevocable contribution, take an immediate tax deduction, and recommend grants to charities over time. Useful for "bunching" deductions: contribute several years of giving in one tax year to exceed the standard deduction, then itemize that year and take the standard deduction in others. Also useful for donating appreciated stock or Bitcoin, which avoids capital gains tax and gives the full FMV deduction.

The decades-long replacement of company pensions (fixed lifetime payments) with 401(k) plans (market-dependent accounts), which moved investment risk from employers to individual workers. In the US, defined-benefit pension coverage in the private sector dropped from roughly 60% of covered workers in 1980 to under 15% by 2023.

Term coined by French Finance Minister Valéry Giscard d’Estaing in 1965 describing the advantages the US gains from the dollar’s reserve-currency status: lower borrowing costs, seigniorage income, and reduced transaction costs in international trade. Estimated at $50-100 billion per year. See The Petrodollar: How Oil Backs the Dollar.

The price an asset would sell for between a willing buyer and seller, both with reasonable knowledge, in an arm's-length transaction. Used to value inherited assets and Bitcoin at time of sale.

Foreign Bank Account Report. Required for US people with foreign financial accounts exceeding $10,000 at any point during the year. verify×DON'T TRUST, VERIFYClaim: FBAR is required when aggregate foreign financial accounts exceed $10,000 at any point during the calendar year.Verify at: FinCEN: Report of Foreign Bank and Financial Accounts ↗FinCEN's guidance sets the $10,000 aggregate threshold, calculated on any single day during the year.

The interest rate at which banks lend to each other overnight. Set by the Federal Reserve. Affects mortgage rates, savings account yields, and the broader economy.

Money declared legal tender by a government, not backed by a physical commodity. Its value rests on trust in the issuing government.

Federal Insurance Contributions Act taxes: Social Security (6.2 percent employee, 6.2 percent employer) and Medicare (1.45 percent each side) withheld from wages. verify×DON'T TRUST, VERIFYClaim: FICA payroll taxes combine a 6.2 percent Social Security share (each side) and a 1.45 percent Medicare share (each side).Verify at: IRS Topic 751 ↗IRS Topic 751 documents employer and employee payroll tax rates.

A person legally obligated to act in your best financial interest. Fee-only registered investment advisors are fiduciaries. Commission-based advisors may not be.

The point at which your investment portfolio generates enough passive income to cover your living expenses indefinitely. Often calculated as 25x annual expenses.

Financial Independence, Retire Early. The movement and strategy of aggressively saving and investing to achieve financial independence decades before traditional retirement age.

A budgeting method that treats savings as a fixed cost paid first, then covers fixed expenses, leaving the remainder for discretionary spending. An alternative to percentage-based budgeting approaches.

The guideline that a portfolio can sustain a 4 percent annual withdrawal, adjusted for inflation, for at least 30 years. Based on William Bengen's 1994 research. verify×DON'T TRUST, VERIFYClaim: The 4 percent withdrawal guideline originates from William Bengen's 1994 Journal of Financial Planning paper.Verify at: Bengen 1994 (FPA archive) ↗Bengen's October 1994 paper tested withdrawal rates against historical US market data and identified roughly 4 percent as the 30-year safe rate.

A banking system where banks hold only a fraction of deposits as reserves and lend out the rest, effectively creating new money through the lending process.

A 1960 US Supreme Court ruling (363 U.S. 603) establishing that Social Security contributions do not create a legal contractual right to benefits. Congress retains the right to modify or eliminate benefits at any time. The legal foundation for why benefit cuts at fund depletion are constitutionally permissible. See Social Security: When It Runs Out & What Happens.

A government strategy for reducing debt burden through sustained inflation above the interest rate on existing debt. Effectively transfers wealth from creditors (bond and cash holders) to the debtor (the government). Used by the US after World War II to reduce debt from ~106% to ~23% of GDP between 1946 and 1974. See The US National Debt: The Honest Math.

The first block of the Bitcoin blockchain, mined by Satoshi Nakamoto on January 3, 2009. Contains the message: 'The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.' verify×DON'T TRUST, VERIFYClaim: Bitcoin's genesis block was mined on January 3, 2009 and embeds the 'Chancellor on brink' headline from The Times.Verify at: mempool.space block 0 ↗The genesis block's coinbase transaction is public and decodes to the Times headline.

Earning income at rates typical of a high-cost area while living in a lower-cost area. Remote work has made this accessible to more people than ever before.

The schedule by which a target date fund gradually reduces stock exposure and increases bond exposure as it approaches and passes the target retirement year.

A monetary system where currency is directly tied to and redeemable for a fixed quantity of gold. The US abandoned the last vestiges in 1971.

An investing approach that tilts a portfolio toward stock characteristics ("factors") that academic research suggests have produced higher long-run returns than the market: small-cap (size), value (low price-to-book), profitability/quality, momentum, and low-volatility. The premium is real in long historical samples but can underperform for 10 to 15 years; most investors are better served by a simple market-cap-weighted index fund unless they understand the tracking error and can hold through long droughts.

The event that cuts Bitcoin's block reward in half approximately every four years (every 210,000 blocks). Reduces the rate of new Bitcoin supply. The most recent halving was April 19, 2024. verify×DON'T TRUST, VERIFYClaim: Bitcoin's fourth halving occurred on April 19, 2024, dropping the block subsidy to 3.125 BTC.Verify at: bitcoinblockhalf.com ↗Halving dates are fixed by block height (every 210,000 blocks). April 19, 2024 corresponds to block 840,000.

A physical device that stores Bitcoin private keys offline. The most secure method for personal Bitcoin custody.

A mathematical function that converts any input into a fixed-length output. Bitcoin uses SHA-256. Changing any part of the input produces a completely different output.

The total computing power dedicated to the Bitcoin network. A higher hash rate means more competition to mine Bitcoin and a more secure network.

The dollar revenue a miner earns per unit of hashrate per day. Calculated from block subsidy, transaction fees, BTC price, and network difficulty. Used to evaluate whether mining is profitable at a given electricity cost. See Cloud Mining →

A tax filing status for unmarried people who pay more than half the cost of keeping up a home for a qualifying person. Receives better tax rates than single filing status.

A tax-advantaged account for people with high-deductible health plans. Triple tax advantage: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.

A health insurance plan with a higher deductible and lower premium than traditional plans. Required to contribute to an HSA.

Originally a typo for 'hold' in a 2013 Bitcoin forum post. Now used to describe the strategy of holding Bitcoin long-term without selling during downturns.

US government savings bonds with a composite interest rate tied to inflation. $10,000 annual purchase limit per person. Must hold at least one year. verify×DON'T TRUST, VERIFYClaim: The annual purchase limit on electronic I-bonds is $10,000 per person.Verify at: TreasuryDirect I-bond rules ↗TreasuryDirect sets the $10,000 electronic limit per Social Security Number per calendar year, plus up to $5,000 paper bonds via tax refund.

A type of employee stock option with favorable tax treatment. No ordinary income tax at exercise but may trigger the Alternative Minimum Tax (AMT).

A fund that tracks a market index (like the S&P 500) rather than actively selecting stocks. Consistently outperforms most actively managed funds over long periods due to lower costs. verify×DON'T TRUST, VERIFYClaim: Over most rolling 10 to 20 year windows, a majority of actively managed US equity funds underperform their benchmark index.Verify at: S&P Dow Jones SPIVA ↗SPIVA publishes the active-vs-passive scorecard for US and international funds over multiple horizons.

A tax-advantaged account for retirement savings. Two main types: Traditional (tax-deductible contributions, taxed withdrawals) and Roth (after-tax contributions, tax-free withdrawals).

A general increase in price levels over time, reducing the purchasing power of money. The Federal Reserve's official long-run target is 2 percent annually. verify×DON'T TRUST, VERIFYClaim: The Federal Reserve's long-run inflation target is 2 percent, measured by PCE.Verify at: Federal Reserve on inflation ↗The FOMC's Statement on Longer-Run Goals sets a 2 percent PCE inflation target.

Income-Related Monthly Adjustment Amount. A Medicare surcharge applied when your income exceeds certain thresholds. Based on income from two years prior.

Buying a 2-4 unit property, living in one unit, and renting the others to cover most or all of your housing cost. Qualifies for owner-occupied financing (FHA 3.5% down, conventional 5% down, VA 0% down) which is far cheaper than investor financing. Also lets you depreciate the rented portion. Tradeoff: you become a landlord with tenants sharing your roof.

The tendency to return to a baseline level of happiness after positive or negative changes. A salary raise feels great for 3 to 6 months, then becomes the new normal and you want more. The financial implication: lifestyle creep is built into your wiring, so the only durable defense is automating savings increases at the same time as raises, before the new income hits your spending account.

A form of joint ownership where, if one owner dies, their share automatically transfers to the surviving owner without probate.

UK tax-advantaged account. Contributions are post-tax but all growth and withdrawals are tax-free, with no age restriction on access. Annual allowance is GBP 20,000 (2024-25). Variants: Cash ISA (savings), Stocks and Shares ISA (investments), Lifetime ISA / LISA (GBP 4,000 per year, 25% government bonus, for first home or age 60+ withdrawal), and Junior ISA (for children under 18).

Identity verification requirements imposed on financial institutions by regulators. Bitcoin exchanges require KYC for most US users. Non-KYC Bitcoin typically costs more to acquire.

The concept that money exists in hierarchical layers: gold as the base, paper as a claim on gold, digital as a claim on paper. Bitcoin represents a new independent base layer.

A Ledger hardware wallet feature that backs up your seed phrase with third-party custodians. Controversial because it revealed the seed phrase can be extracted from the device with a firmware update.

A second-layer payment protocol built on Bitcoin that enables fast, low-cost transactions by settling off-chain.

How quickly and easily an asset can be converted to cash without significantly affecting its price. Bitcoin is highly liquid. Real estate is not.

The minimum income needed to cover basic needs in a given location without government assistance. Calculated by MIT's Living Wage Calculator by county and household type.

Gains from assets held more than one year. Taxed at preferential rates of 0, 15, or 20 percent depending on income, significantly lower than ordinary income rates.

A measure of the money supply that includes cash, checking deposits, and near-money like savings accounts. M2 growth correlates with inflation over time.

The tax rate applied to your last dollar of income, the top bracket you're in. Different from your effective rate, which is the average across all brackets.

Supplemental Medicare insurance sold by private insurers that covers costs not paid by Original Medicare. Must be purchased during the 6-month open enrollment window starting at age 65.

Short for memory pool. The waiting area for Bitcoin transactions that have been broadcast but not yet confirmed in a block.

A computer (or network of computers) that processes Bitcoin transactions by solving the proof-of-work puzzle. Miners are rewarded with newly created Bitcoin and transaction fees.

A variation of AGI used to determine eligibility for specific tax deductions and credits. Calculated by adding back certain deductions to AGI.

The cognitive bias that losses feel roughly twice as painful as equivalent gains feel good. A $1,000 loss hurts about as much as a $2,000 gain delights. Documented by Kahneman and Tversky in prospect theory. Practical implication: investors panic-sell during drawdowns even when they shouldn't, and avoid rational risks (like investing) because the pain of a possible loss outweighs the math of a probable gain.

The appreciation in employer stock held inside a 401(k). The NUA strategy allows this appreciation to be taxed at long-term capital gains rates rather than ordinary income rates upon distribution.

Total assets minus total liabilities. The most comprehensive measure of financial health. Track monthly.

President Nixon's 1971 decision to end the convertibility of US dollars to gold, effectively ending the Bretton Woods system and beginning the era of pure fiat currency globally.

A Bitcoin wallet where you control the private keys and seed phrase. No third party holds your Bitcoin on your behalf.

A dividend taxed as ordinary income rather than at the preferential capital gains rate. Includes all REIT distributions, money market fund interest, and dividends on short-held positions.

Employee stock options that don't qualify for ISO tax treatment. The spread between grant price and market price is taxed as ordinary income at exercise.

The tendency to treat money differently based on its source or label, even though dollars are fungible. Examples: spending tax refund money more freely than salary; refusing to sell a losing stock to fund a winning one (a "loss" feels real only when realized); keeping cash in a 0.5% savings account "for emergencies" while carrying 22% credit card debt. Recognizing this bias lets you rebalance: money is money regardless of which account it sits in.

When someone takes more risk because they expect to be protected from the consequences of that risk. In the retirement context: financial industries can be argued to take excessive risks because they expect government protection if those risks would otherwise cause broad retirement losses.

A Bitcoin transaction that is recorded directly on the Bitcoin blockchain. Permanent, irreversible, and visible to anyone.

The value of the next-best alternative you give up when making a choice. Spending $50 has an opportunity cost equal to what that $50 would have grown to if invested.

The recommended sequence for allocating money: emergency fund, employer match, high-interest debt payoff, HSA, Roth IRA, 401(k), taxable accounts.

A disability insurance policy that pays benefits if you cannot perform the duties of your specific job. More protective than any-job coverage, which requires inability to do any job.

An additional 3.8% federal tax on net investment income (interest, dividends, capital gains, rents, passive business income) for taxpayers above $200,000 MAGI single / $250,000 MAGI married filing jointly. The 3.8% applies to the lesser of (a) net investment income or (b) the amount MAGI exceeds the threshold. Reported on Form 8960. Thresholds are NOT indexed for inflation, so more households trigger NIIT each year via bracket creep.

Old-Age and Survivors Insurance, the Social Security retirement fund. Distinct from DI (Disability Insurance). The CBO projects OASI depletes around 2032; combined OASDI around 2033. CBO's February 2026 projection puts the OASI retirement-fund depletion around 2032 with an automatic cut of approximately 7% that year, deepening to roughly 28% by 2036 as the demographic gap widens. The SSA Trustees Report (June 2025) projects a slightly later depletion year and a single-step cut closer to 21%. See Social Security: When It Runs Out & What Happens.

A designation on bank accounts that automatically transfers the account to a named beneficiary upon death, bypassing probate.

A long-con fraud where scammers build a relationship over weeks or months before introducing a fake cryptocurrency investment platform. Victims deposit real money that cannot be withdrawn.

A secret number that proves ownership of Bitcoin. Your hardware wallet generates and stores this. Anyone with your private key controls your Bitcoin. Usually represented as a seed phrase.

The IRS rule that determines the taxable portion of an IRA conversion when you have both pre-tax and after-tax IRA balances. The most common trap in Backdoor Roth IRA execution.

Bitcoin's consensus mechanism. Miners compete to solve a computational puzzle. The first to solve it adds the next block and receives the block reward. Makes altering the blockchain computationally prohibitive.

A Bitcoin address derived from your private key. You share this to receive Bitcoin. Cannot be used to derive your private key.

The value of money measured by what it can buy. Inflation reduces purchasing power over time.

The process by which oil-exporting countries earn dollars from oil sales, then invest those dollars in US Treasury bonds. The recycling suppresses US long-term interest rates by an estimated 40-100 basis points and helps finance US deficits. See The Petrodollar: How Oil Backs the Dollar.

The arrangement by which oil is priced and traded globally in US dollars, creating structural international demand for the dollar. Rooted in a 1974 US-Saudi Arabian agreement. Contributes an estimated $50-100 billion per year in economic benefit to the US through lower Treasury yields. See The Petrodollar: How Oil Backs the Dollar.

A deduction allowing self-employed people and pass-through business owners to deduct up to 20% of qualified business income. Subject to income phase-outs and service-business limits. Originally a TCJA provision; made permanent by the One Big Beautiful Bill Act, signed July 4, 2025.

A dividend that meets IRS holding-period and issuer requirements to be taxed at the lower long-term capital gains rate (0, 15, or 20 percent) rather than as ordinary income (up to 37 percent). Most dividends from US stocks held for more than 60 days qualify.

Federal student loan made to the PARENT (not the student) of a dependent undergraduate. Has the highest fixed interest rate of any federal student loan (currently 9.08% for 2024-25) plus a ~4.2% origination fee. Loan stays with the parent forever. Forgiveness is harder to access than for student loans, and the Saving on a Valuable Education / SAVE plan does NOT cover Parent PLUS. Borrowing limit is the cost of attendance minus other aid, so families can dig themselves into severe holes.

The court-supervised process of validating a will, paying the deceased's debts and taxes, and distributing remaining assets to beneficiaries. Takes 6 to 18 months on average, costs 3 to 8% of the estate in fees, and is a public record. Avoidable for most assets via beneficiary designations (retirement accounts, life insurance), joint tenancy with right of survivorship (real estate, bank accounts), payable-on-death / transfer-on-death designations, and revocable living trusts.

The process of buying and selling assets to restore your target allocation after market movements have caused drift. A common trigger is any asset class more than 5 percentage points off target.

The minimum amount you must withdraw annually from traditional retirement accounts starting at age 73. verify×DON'T TRUST, VERIFYClaim: The starting age for RMDs is 73 under SECURE 2.0 and rises to 75 in 2033.Verify at: IRS: RMDs ↗SECURE 2.0 (2022) raised the RMD start age from 72 to 73 effective 2023, and to 75 in 2033.

A form of equity compensation where the company grants you shares that vest over time. Taxed as ordinary income at the time of vesting.

Moving money from a Traditional IRA or 401(k) to a Roth account. You pay ordinary income tax on the converted amount. Most valuable when done in low-income years.

A retirement account funded with after-tax dollars. Investments grow tax-free and qualified withdrawals are tax-free in retirement.

A shortcut to estimate how long it takes money to double. Divide 72 by the annual return. At 7 percent return: 72 divided by 7 equals about 10.3 years.

A federal program that lets investors defer capital gains by reinvesting them into a Qualified Opportunity Fund (QOF) within 180 days. Three benefits: (1) defer the original gain until 2026 or earlier sale, (2) exclude 10% of the deferred gain if held 5+ years, (3) pay zero capital gains tax on the QOF's OWN appreciation if held 10+ years. The 10-year exclusion is the powerful piece. Investments are illiquid for a decade and concentrated in single projects; the tax tail should not wag the investment dog.

See Qualified Opportunity Zone. Federal tax program for deferring and potentially eliminating capital gains via Qualified Opportunity Funds.

The condition where the interest rate on debt (r) exceeds the economic growth rate (g). Beyond this point, debt grows faster than the economy’s ability to pay it, creating a compounding spiral. The CBO projects the US will cross this threshold around 2031. The formulation is canonical in public finance; see Blanchard, “Public Debt and Low Interest Rates,” AER 2019. See The US National Debt: The Honest Math.

The annual percentage of a portfolio you can withdraw, adjusted for inflation, without depleting the portfolio over your retirement horizon. Roughly 4 percent for 30-year retirements. Roughly 3 to 3.5 percent for 50-year early retirements.

State and Local Tax deduction. Capped at $10,000 for federal income tax purposes under the Tax Cuts and Jobs Act. verify×DON'T TRUST, VERIFYClaim: The SALT deduction is capped at $10,000 under TCJA, subject to ongoing legislative debate.Verify at: IRS Topic 503 ↗The $10,000 cap was enacted in 2017 by the Tax Cuts and Jobs Act. Check current law for any amendments.

The smallest unit of Bitcoin. One Bitcoin equals 100 million satoshis. Named after Bitcoin's pseudonymous creator, Satoshi Nakamoto.

The pseudonymous person or group who created Bitcoin and published the Bitcoin whitepaper in 2008. Their identity remains unknown.

The percentage of your income that you save and invest. The single most powerful variable in wealth building, especially in the first two decades.

The 12 or 24 words that represent your Bitcoin wallet's private key. Anyone who has these words has complete control of your Bitcoin. Never share. Never store digitally.

The 15.3 percent tax self-employed people pay on net earnings, covering both the employee and employer share of Social Security and Medicare taxes.

The risk that poor investment returns early in retirement permanently deplete a portfolio even if long-run returns are acceptable. Especially dangerous in the first 5 to 10 years of retirement.

The cryptographic hash function used by Bitcoin. Converts any input into a 256-bit output. Currently considered secure against classical computing attacks.

The practice of reducing a product's quantity while maintaining its price, a form of hidden inflation not fully captured by official CPI measurements.

An identity theft attack where a criminal convinces your phone carrier to transfer your number to their SIM card. Used to intercept SMS two-factor authentication codes.

A 401(k) plan for self-employed people with no full-time employees. Allows contributions as both employee and employer, enabling a combined annual limit well above a standard IRA.

An open-source Bitcoin wallet software for desktop. Connects to your own node or public servers. Strong UTXO and privacy management features.

Fidelity Government Money Market Fund. The default sweep vehicle for the Fidelity Cash Management Account. Earns competitive yield on idle cash.

The difference between the Bitcoin market price and the price an exchange actually charges you. A hidden cost that adds to the stated transaction fee.

A fixed dollar amount that reduces taxable income for taxpayers who don't itemize. Most taxpayers claim the standard deduction.

The adjustment of an inherited asset's cost basis to its fair market value at the date of the owner's death. Eliminates capital gains tax on appreciation that occurred during the deceased's lifetime.

The tendency to weight recent events more heavily than older ones when forming expectations. After a 12-year bull market in US large-cap stocks, recency bias makes investors abandon diversification and pile into what just worked. After a crash, the same bias makes them sell at the bottom and stay in cash for years. The historical 8-10% nominal stock return is ABOUT a long average; the path to it is full of decades that look nothing like the average.

Canadian tax-deferred retirement account. Contributions reduce current taxable income (similar to a US Traditional 401(k) or IRA); growth is tax-deferred; withdrawals are fully taxable as ordinary income. Annual contribution room is 18% of prior year earned income up to a cap (CAD 31,560 for 2024). Unused room carries forward indefinitely. Must be converted to a RRIF and start withdrawals by the end of the year you turn 71.

The profit a government earns from issuing currency: the difference between the face value of money and the cost of producing it. When foreign countries hold US dollars rather than spending them, the US effectively receives an interest-free loan, generating an estimated $10-20 billion per year. See The Petrodollar: How Oil Backs the Dollar.

A 2021 Bitcoin protocol upgrade that improved transaction privacy and efficiency, and enabled more complex smart contract functionality via Schnorr signatures.

A fund-of-funds that automatically shifts from aggressive to conservative allocation as it approaches its target year. Designed as a single-fund retirement portfolio. Higher cost than building an equivalent portfolio from individual index funds.

Selling an investment that has declined in value to realize a capital loss, then immediately buying a similar (not substantially identical) investment. The loss offsets gains and reduces tax liability.

Life insurance that pays a death benefit for a specified period (term). Significantly cheaper than whole life insurance for the same death benefit. Recommended over whole life for most households.

A simple investing approach using three index funds: US total market, international total market, and bonds. Achieves broad diversification at minimal cost.

How much an individual values present consumption versus future consumption. Low time preference, preferring to save now for larger future gains, is the highest-correlation variable with long-term financial success.

Investment return including both price appreciation and income (dividends or interest). The complete measure of investment performance.

A retirement account funded with pre-tax dollars (if deductible). Contributions reduce taxable income. Withdrawals in retirement are taxed as ordinary income.

A designation on investment accounts that automatically transfers the account to named beneficiaries upon death, bypassing probate.

Short-term US government securities with maturities from 4 weeks to 52 weeks. Interest is exempt from state and local income tax.

Continuing a losing course of action because of the resources already invested, rather than because future expected returns justify it. "I've already paid $5,000 in repairs on this car so I might as well fix the transmission" ignores that the $5,000 is gone either way; the only relevant question is whether the next $4,000 is worth it. Common with stocks ("I'll wait until it gets back to what I paid"), houses, careers, and relationships. Decision rule: the right comparison is always forward-looking.

Australia's mandatory employer-funded retirement system. Employers must contribute a percentage of employee wages into a Super fund (12.0% of ordinary time earnings from 1 July 2025; was 11.5% in 2024-25 under the legislated staged increase). Contributions are taxed at 15% inside the fund (concessional), and earnings while accumulating are also taxed at 15%. Withdrawals after preservation age (currently 60) are tax-free. Self-managed Super funds (SMSFs) allow direct control including limited Bitcoin exposure under ATO rules.

The structural conflict facing any reserve-currency issuer: to supply the world with the reserve currency, you must run trade deficits; to maintain the currency’s value, you should run surpluses. Identified by Belgian-American economist Robert Triffin in 1960 (Gold and the Dollar Crisis). Explains why no other major economy wants the reserve burden. See The Petrodollar: How Oil Backs the Dollar.

Liability insurance that provides coverage beyond your auto and homeowner limits. Typically $1 million of coverage costs roughly $150 to $300 per year. Worth considering once net worth exceeds your auto liability limits. verify×DON'T TRUST, VERIFYClaim: Typical $1 million umbrella policies retail for roughly $150 to $300 per year in the US.Verify at: Insurance Information Institute on umbrella cost ↗Pricing varies by state, claims history, and underlying limits. Compare quotes from multiple carriers at purchase time.

The fundamental unit of Bitcoin accounting. When you receive Bitcoin, you receive UTXOs. When you spend Bitcoin, you consume UTXOs and create new ones.

The 2017 federal tax law that nearly doubled the standard deduction, cut individual tax rates, capped the SALT deduction at $10,000, doubled the estate-tax exemption, created the 20% QBI deduction for pass-through income, and permanently cut the corporate tax rate to 21%. Most TCJA individual provisions were made permanent by the One Big Beautiful Bill Act, signed July 4, 2025; corporate provisions were already permanent. The 2026 standard deduction is $16,100 single and $32,200 married filing jointly. See the TCJA sunset page for the full rundown.

Canadian tax-advantaged account. Contributions are post-tax but ALL growth and withdrawals are tax-free. Annual contribution limit is CAD 7,000 (2024). Unused room carries forward and adds back when you withdraw (lifetime room is restored the calendar year after a withdrawal). No required minimum distributions and no age limit. Roughly analogous to a US Roth IRA but more flexible because withdrawals can be re-contributed.

The timeline over which an employee earns the right to employer contributions or stock grants. A common structure is 4-year vesting with a 1-year cliff.

The tax form employers send to employees showing annual wages and taxes withheld. Used to file your federal and state income tax return.

The IRS rule preventing you from claiming a capital loss if you buy the same or substantially identical security within 30 days before or after the sale. Applies to securities. Currently does not apply to Bitcoin, though this could change. verify×DON'T TRUST, VERIFYClaim: The wash sale rule currently does not apply to direct holdings of Bitcoin because Bitcoin is classified as property, not a security.Verify at: IRS Topic 409 ↗Wash sale rules (IRC Section 1091) reference stocks and securities. Legislative proposals have periodically sought to extend them to digital assets, so track current law.

The original 9-page document published by Satoshi Nakamoto in October 2008 titled 'Bitcoin: A Peer-to-Peer Electronic Cash System.'

A life insurance policy that combines a death benefit with a savings component. Typically earns a low single-digit percent annually on the cash value after fees. The first-year commission to the selling agent is often close to the full first-year premium, which is why it is aggressively sold.