A financial product that pays out a fixed stream of income, typically used for retirement planning.
An annuity is a contract with an insurance company where you invest a lump sum or series of payments and receive regular disbursements, either immediately or at a future date.
PV = PMT × [(1 − (1+r)^−n) / r], where PMT = periodic payment, r = rate per period, n = number of periods.
The yearly cost of borrowing money expressed as a percentage, including fees and interest.
Interest calculated on both the initial principal and the accumulated interest from previous periods.
The process of spreading loan payments over time so each payment covers both principal and interest.
A ratio measuring the gain or loss from an investment relative to its cost, expressed as a percentage.
The total value of all assets minus all liabilities, representing overall financial health.
The ownership value in an asset after subtracting any debts owed against it.