Financial literacy: terms

Annuity payment

Equal monthly loan payment: mostly interest at the start, principal at the end. The alternative is a declining (differentiated) payment with less overpayment but higher early payments.

Effective rate (APR)

Real loan cost with all fees and insurance — always higher than the nominal rate. Compare loans only by effective rate.

Inflation

Money depreciation: 10% inflation = cash loses ~9% of purchasing power per year. Real yield = nominal − inflation.

Real yield

Yield net of inflation (and taxes). A 15% deposit at 12% inflation gives ~2.7% real.

Liquidity

How fast an asset converts to cash without losing value. Cash is absolute liquidity, real estate is low.

Diversification

Spreading money across different assets/currencies/instruments — reduces the risk of losing everything at once.

Compound interest

Interest on interest: 10%/yr doubles capital in ~7.2 years (rule of 72). Works against you too — in loans.

Deposit guarantee fund

State deposit insurance: up to 600k UAH per bank in peacetime, 100% during martial law. Doesn't cover banks' 'investment' products.

Emergency fund

3–6 months of expenses in liquid form (accessible deposit, cash). The base before any investing.

Credit history

Records of loans and payments at credit bureaus. A delinquency lives 5+ years and ruins mortgage chances.

Refinancing

Replacing a loan with a new one on better terms (lower rate/smaller payment). Makes sense at >3–5% rate difference counting fees.

Snowball / avalanche

Two multi-debt payoff strategies: snowball — smallest first (motivation), avalanche — most expensive first (mathematically cheaper).