InvestingFIRE glossary
Defined termDollar-Cost Averaging (DCA)
Investing a fixed amount on a regular schedule regardless of price. Smooths out volatility and removes emotion from timing decisions.
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Expense Ratio
The annual fee a fund charges, expressed as a percentage. A 0.03% ratio means $3/year on $10,000. Tiny differences compound massively over 20+ years — always minimize this.
Target Date Fund
An all-in-one fund that automatically shifts from stocks to bonds as a target retirement year approaches. Great default inside 401(k)s; less ideal in taxable due to capital gains distributions.
Rebalancing
Periodically selling overweight assets and buying underweight ones to return to your target allocation. Forces "buy low, sell high" mechanically, without prediction.
Asset Allocation
How your portfolio is split across asset classes (stocks, bonds, cash, real estate). The single biggest driver of long-term returns and volatility — pick one you can actually stomach in a crash.
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