The rate of return is the percentage gain or loss on an investment. You calculate rate of return by dividing the total return - any income from the investment plus or minus the change in the investment's value - by the amount that was invested. Rate of return may be calculated for any time period, though multiyear returns are typically annualized by dividing the total return by the number of years that have elapsed.

You find the real rate of return on an investment by subtracting the rate of inflation from the nominal, or named, rate of return. For example, if you have a return of 6% on a bond in a period when inflation is averaging 2%, your real rate of return is 4%. But if inflation were 4%, your real rate of return would be only 2%.

Finding real rate of return is generally a calculation you have to do on your own. It isn't provided in annual reports, prospectuses, or other publications that report investment performance.

Broadly defined, a recession is a downturn in a nation's economic activity. The consequences typically include increased unemployment, decreased consumer and business spending, and declining stock prices. Recessions are typically shorter than the periods of economic expansion that they follow, but they can be quite severe even if brief. Recovery is slower from some recessions than from others.

The National Bureau of Economic Research (NBER), which tracks recessions, describes the low point of a recession as a trough between two peaks, the points at which a recession began and ended - all three of which can be identified only in retrospect.

The Conference Board, a business research group, considers three consecutive monthly drops in its Index of Leading Economic Indicators a sign of decline and potential recession up to 18 months in the future. The Board's record in predicting recessions is uneven, having correctly anticipated some but expected others that never materialized.

A required minimum distribution is the smallest amount you can take each year from your 401(k), 403(b), traditional IRA, or other retirement savings plan once you've reached the mandatory age for making withdrawals, usually 72. If you take less than the required minimum, you owe a 50% penalty on the amount you should have taken.

You calculate your RMD by dividing your account balance at the end of your plan's fiscal year — usually but not always December 31 — by a uniform withdrawal factor determined by your life expectancy. If your spouse is your beneficiary and more than ten years younger than you are, you can use a longer life expectancy than you can in all other circumstances.

Your return is the profit or loss you have on your investments, including income and change in value. Return can be expressed as a percentage and is calculated by adding the income and the change in value and then dividing by the initial principal or investment amount. You can find the annualized return by dividing the percentage return by the number of years you have held the investment.

For example, if you bought a stock at $25 a share and sold it for $30 a share, your return would be $5. If you bought on January 3, and sold it the following January 4, that would be a 20% annual percentage return, or the $5 return divided by your $25 investment. But if you held the stock for five years before selling for $30 a share, your annual return would be 4%, because the 20% gain is divided by five years rather than one year.

Percentage return and annual percentage return allow you to compare the return provided by different investments or investments you have held for different periods of time.

According to modern investment theory, the greater the risk you take in making an investment, the greater your return should be if the investment succeeds. For example, investing in a startup company carries substantial risk, since there is no guarantee that it will be profitable. But if it is, you're likely to realize a greater gain than if you had invested a similar amount in an already established company.

As a rule of thumb, if you are unwilling to take some investment risk, you are likely to limit your investment reward. For example, if you put all your money into insured bank deposits, which protects your principal, your real rate of return is unlikely to exceed inflation.

If you move your assets from one investment to another, it's called a rollover. For example, if you move money from one individual retirement annuity (IRA) to another IRA, that transaction is a rollover. In the same vein, if you move money from a qualified retirement plan into an IRA, you create a rollover IRA.

Similarly, when a bond or certificate of deposit (CD) matures, you can roll over the assets into another bond or time deposit.

A rollover IRA is an individual retirement annuity you create with tax-deferred assets you move from an employer sponsored retirement plan to a self-directed investment account. If you arrange for a direct rollover, the trustee of your employer's plan transfers the assets to the trustee you select for your IRA. In that case the total value of the account moves from one to the other.

If you handle the rollover yourself, by getting a check from your employer's plan and depositing it in your IRA, your employer must withhold 20% of the total to prepay taxes that will be due if you fail to redeposit the full amount of the money you're moving into a tax-deferred account within 60 days.

The required withholding forces you to supply the missing 20% from another source to meet the deposit deadline if you want to maintain the tax-deferred status of the full amount and avoid taxes and a potential early withdrawal tax penalty on the amount you don't deposit in the IRA.

A direct rollover or transfer occurs when you instruct the trustee or custodian of your tax-deferred retirement savings account, such as a 401(k) or 403(b), to move the assets in the account to the trustee or custodian of a different retirement plan or IRA. Because both accounts are tax-deferred, and the transaction is handled between trustees or custodians, the account continues to be tax-deferred, and no taxes are withheld.

In contrast, an indirect rollover or transfer occurs if you handle moving the assets yourself by receiving a distribution from a plan or IRA and then depositing the funds into another plan or account. In those cases, the plan administrator or account custodian must withhold 20% of the account value for federal income tax. You will not be taxed on the distribution if you deposit the fund into a qualified plan or IRA within 60 days.

The Roth 401(k) retirement plan, which was introduced in 2006, allows you to make after-tax contributions to your account. Earnings may be withdrawn tax free, provided that you are at least 59½ and your account has been open five years or more.

Both the Roth 401(k) and the traditional 401(k) have the same contribution limits and distribution requirements. You can add no more than the annual federal limit each year, and you must begin taking required minimum distributions (RMD) by April 1 of the year following the year you reach age 72.  You can postpone RMDs if you are still working.

You may not move assets from a Roth 401(k) account to a traditional account, though you may be able to split your annual contribution between the two. If you leave your job or retire, you can roll Roth 401(k) assets into a Roth IRA, just as you can roll traditional 401(k) assets into a traditional IRA.

Most 401(k) plans, including the Roth, are self-directed, which means you must choose specific investments from among those offered through the plan.

A Roth IRA is a variation on a traditional individual retirement account (IRA). It allows you to withdraw your earnings completely tax free any time after you reach age 59½, provided your account has been open at least five years. Because contributions are made with after-tax dollars, they can be withdrawn tax free as well.

You may also be able to withdraw money earlier without penalty if you qualify for certain exceptions, such as using up to $10,000 toward the purchase of a first home. And since a Roth IRA has no required withdrawals, you can continue to accumulate tax-free earnings as long as you like.

You can make a nondeductible annual contribution, up to the annual federal limit, any year you have earned income, even after age 72, though you can never contribute more than you earn. If you are 50 or older, you may also make annual catch-up contributions.

To contribute to a Roth IRA, your modified adjusted gross income (AGI) must be less than the annual limit set by Congress.

This capitalization-weighted index, published by the Frank Russell Company of Tacoma, WA, tracks the 1,000 largest stocks that are included in the Russell 3000 Index and represents approximately 92% of the market value US stock. The index is rebalanced annually, at the end of June, and is widely used as a benchmark of large-cap US stock performance.

The Russell 2000 Index, published by the Frank Russell Company of Tacoma, WA, tracks the stocks of the 2,000 smallest companies in the Russell 3000 Index. The index includes many of the initial public offerings (IPOs) of recent years and is considered the benchmark index for small-cap investments.