Term Of The Day: Standard Deduction
------------------------------------------------------------A base amount of income that is not subject to tax and that
can be used to reduce a taxpayer's adjusted gross income (AGI).
A standard deduction can only be used if the taxpayer does
not choose the itemized deduction method of calculating
taxable income. The amount of the standard deduction is based
on a taxpayer's filing status, age and whether he or she is
disabled or claimed as a dependent on someone else's tax return.
Enhanced Indexing
An investment philosophy that attempts to amplify the returns of an underlying portfolio or index fund while also minimizing the effects of tracking error. This type of investing is considered a hybrid between active and passive management and is used to describe any strategy that is used in conjunction with index funds for the purpose of outperforming a specific benchmark.
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