Below is a glossary of crypto lingo we have covered that you can refer to as a quick cheat sheet.
Annual Percentage Rate (APR) – does not consider the compounding of interest within a specific year. It is calculated by multiplying the periodic interest rate by the number of periods in a year in which the periodic rate is applied.
Annual Percentage Yield (APY) – does consider the frequency with which the interest is applied—the effects of intra-year compounding. APY is calculated by adding 1+ the periodic rate as a decimal and multiplying it by the number of times equal to the number of periods that the rate is applied, then subtracting 1.
Effective Tax Rate – This is the blended tax rate based on the taxes you are paying on the taxable income that you generated.
Taxable Income – This would be your pretax income and wages minus any applicable tax deductions before calculating the taxes you owe.
Gross Income – includes not just wages or salary but also other forms of income, such as tips, capital gains, rental payments, dividends, alimony, pension, and interest. After subtracting above-the-line tax deductions, the result is adjusted gross income (AGI).
Net Worth – This is the amount of value you would have leftover if you sold all your assets and paid off all your liabilities.
Alternative Minimum Tax (AMT) – places a floor on the percentage of taxes that a filer must pay to the government, no matter how many deductions or credits the filer may claim. The AMT recalculates income tax after adding certain tax preference items back into adjusted gross income.
Tax Deduction – Reduces the taxable income that you must pay taxes against.
Tax Credit – Reduces the total tax liability you owe.
Asset – An item that has a value such as cash, stocks, real estate, or cars.
Liability – Money that is owed to someone else such as a loan (student, mortgage, credit cards, etc.).
Real Estate Investment Trust (REIT) – is a company that owns, and in most cases operates income-producing real estate. You can invest in REITs to gain exposure to real estate without physically having to buy and manage the property.
Expense – Money that you are spending (items like groceries, utilities, phone bills, etc.).