InvestingFIRE glossary
Defined termDividend
A cash payment a company makes to shareholders, usually quarterly. Gets taxed differently from ordinary income if "qualified" — long-term cap gains rates apply.
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Rebalancing
Periodically selling overweight assets and buying underweight ones to return to your target allocation. Forces "buy low, sell high" mechanically, without prediction.
Real Return
Investment return after subtracting inflation. A 10% nominal return with 3% inflation is a 7% real return — what actually grows your purchasing power.
Treasury Bills (T-Bills)
Short-term U.S. government debt (4-week to 1-year maturities). State-tax-free and one of the safest places to park cash — often beat high-yield savings rates.
Tax-Loss Harvesting (TLH)
Selling losing positions in a taxable account to bank the capital loss for tax purposes, then buying a similar (not identical) asset. Can offset up to $3,000/year of ordinary income.
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