The original amount of money borrowed or invested, excluding interest or earnings.
In lending, principal is the amount you originally borrowed. Each monthly payment splits between interest and principal reduction. Over time, a larger share goes toward principal.
In investing, principal is the original sum you put to work. Your returns (interest, dividends, capital gains) are calculated on top of this base amount. Preserving principal is a primary goal of conservative strategies.
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.