InvestingFIRE glossary
Defined termETF
Exchange-Traded Fund
A fund that trades on an exchange like a stock. ETFs often track an index, have low expense ratios, and can be bought and sold throughout the trading day.
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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.
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.
Compound Interest
Earning returns on your previous returns. At a 7% real return money doubles every ~10 years — the engine that makes FIRE possible.
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