Beneficiary – The person(s), institution, or estate you designate to receive your retirement account balance if you die before the entire amount is withdrawn.
Assets – Anything with commercial value that is owned and adds to your net worth, including cash and savings, investments (such as your retirement account), and property (such as a home or car that you own).
Asset allocation – The process of dividing your investment funds into different types of asset classes, such as stocks, bonds and cash reserves.
Asset transfer - The process of moving your money or shares (assets) from one vendor to another.
Bond –a bond is a debt instrument created for the purpose of raising capital for an organization. When you purchase a bond, you are "loaning" money (the principal ) to the bond issuer (the organization) for a defined period of time. When the bond matures, the organization repays the principal to you, and in most cases, you receive regular interest payments (income) in the meantime. Bonds are generally considered to be less risky and lower performing investments than stocks and can help diversify your portfolio.
Brokerage account fees – Fees associated with investment options held in a brokerage account such as Fidelity BrokerageLink. Commissions and fees are subject to change. (Refer to the Fact Sheet and Brokerage Commission and Fee Schedule for a complete listing of Fidelity BrokerageLink fees.)
BrokerageLink - A self-directed brokerage account that allows you to invest in numerous mutual funds outside of the Vanderbilt retirement plan’s core investment lineup. These accounts are not monitored or reviewed by Vanderbilt, or outside parties, unless you have hired a personal investment advisor. You are responsible for managing investments within your BrokerageLink account. Depending on the funds you choose to invest in, and whether you choose automatic investments, you may also pay transaction or other fees. BrokerageLink corresponds to the Tier 3 investments in Vanderbilt’s retirement plan. Refer to the Fact Sheet and Brokerage Commission and Fee Schedule for a complete listing of Fidelity BrokerageLink fees.
Capital gain – Your profit from selling an investment, such as a mutual fund, for a higher price than you originally paid to purchase it.
Core funds – Corresponding with Tiers 1 and 2 of Vanderbilt’s retirement plan, these funds are for investors who would like to divide their contributions among a group of funds carefully selected and monitored by the Retirement Plan Oversight Committee. The Vanderbilt retirement plan core funds consist of 13 funds across seven asset classes, including small-, mid-, and large-cap, international and bonds, plus the target date funds. Click here to see the Tier 1 and Tier 2 funds.
Expense ratio – The percent of a mutual fund’s total value used to pay to manage and maintain it. The ratio depends on the size of the fund and the degree of cost control employed by the manager(s).
Fidelity® Cash Reserves Fund - A short-term, highly liquid mutual fund that earns a low rate of return. You typically would keep money you want to be able to access quickly in this type of fund.
Fiduciary - A person or group of persons appointed and authorized manage the assets for the benefit of another person or group of people rather than for his or her own profit. For the Vanderbilt Retirement Plan, the oversight committee serves in a fiduciary role by overseeing the core investment options in tiers 1 and 2 and managing the plan in the best interest of participants.
Index fund - A type of mutual fund whose portfolio mirrors that of a market index, such as the Standard & Poor's 500 Index (S&P 500). Index mutual funds generally provide broad market exposure, low operating expenses and low portfolio turnover. They tend to have lower fees because the fund owns every security (or an equivalent) in the index, resulting in less work for fund managers.
Investment lineup - The mix of investments offered by a retirement plan. The plan offers a three-tiered approach to investing, including tier 1 target date funds, tier 2 core funds and tier 3 self-directed brokerage.
Legacy account – An account that’s still technically in the retirement plan but is not eligible for future contributions, loans or hardship withdrawals.
Mandatory contributions – Contributions that are required as a condition of employment at Vanderbilt. Mandatory contributions must be made on a pre-tax (not Roth) basis. Visit the HR retirement page for more details.
Money market account - An interest-bearing account that typically pays a higher interest rate than a savings account. Money market accounts are able to offer higher interest rates by requiring a higher minimum balance and placing restrictions on the number of withdrawals you can take over a given period of time. This restriction makes them less liquid than a checking account, but more liquid than bonds.
Mutual fund – An investment fund whose investors’ money is pooled together and professionally managed with the goal of earning maximum capital gains and income. One of the primary advantages of mutual funds is they offer smaller investors access to professionally managed, diversified portfolios of equities, bonds and other securities.
Pre-tax – The more traditional 403(b), which allows you to contribute pre-tax dollars to your retirement account. You pay taxes on the amount you withdraw when you retire.
Rollover - To transfer the holdings of one retirement plan to another without suffering tax consequences; or the process of transferring the investments from a retirement plan into another account.
Roth - Unlike a traditional pre-tax 403(b), the Roth 403(b) allows you to contribute after-tax dollars to your retirement plan and then withdraw tax-free dollars from your account when you retire. Learn more here.
Share – A part of a company or mutual fund that you can own; the number of shares you own determines how much profit you will earn.
Share class – Category of mutual fund share defining the entity that can purchase the share, including:
- Retail share class – This share class is available to all investors and have a higher expense ratio than institutional share classes.
- Institutional share class– This share class is only available to large retirement plans (e.g. Vanderbilt Retirement Plan). Institutional shares offer lower expense ratios and are typically only available through retirement plans.
Short-term trading fee – A fee you may pay if you sell or transfer shares of a fund before a set amount of time passes, usually 30 – 90 days. The Tier 1 and Tier 2 investments do not have a short-term trading fee.
Target date funds – Professionally managed mutual funds designed for investors expecting to retire around the year indicated in each fund’s name. The best practice uses the age of 65 as a participant's expected retirement age. Vanderbilt’s retirement plan includes Fidelity target retirement date funds. Target date funds correspond to the Tier 1 investments in Vanderbilt’s retirement plan.
Voluntary contributions – Formerly called basic and supplemental, voluntary contributions are additional amounts you choose to contribute to the retirement plan above the mandatory level and up to the annual limit set by the IRS. Voluntary contributions can be made on a pre-tax or Roth basis, and the first 2% are matched by Vanderbilt. For more details, visit the HR retirement page .