Investment Terms List
The following is a list of terms used in the investing world and their definitions. Knowing the terminology and understanding how it applies to investing can make your financial journey much easier.
Asset Allocation: The process of deciding how much to invest in different asset classes (stocks, bonds, cash, and so on) in order to reach your financial goals.
Bear Market: A market where the prices of stocks, bonds, or other investments are generally declining.
Blue-Chip Stocks: Stocks of large, well-established companies that have a long track record of success.
Bond: A debt security issued by a government or company which pays the bondholder the principal plus interest payments.
Bull Market: A market where the prices of stocks, bonds, or other investments are generally increasing.
Capital Gains: Profits from the sale of an asset, such as a stock or mutual fund.
Dividend: A payment made to shareholders from a company’s profits.
Growth Investing: A style of investing that focuses on buying stocks of companies that have potential for future growth.
Index Funds: A type of mutual fund that attempts to mimic the performance of a stock market index, such as the S&P 500.
Initial Public Offering (IPO): When a company first offers its shares to the public.
Liquidity: The ability to buy or sell an asset quickly and at a fair price.
Margin: Borrowing money from a broker to buy stocks.
Market Capitalization: The total market value of a companys outstanding shares of stock.
Mutual Funds: A professionally-managed investment fund that pools money from investors.
Portfolio: An individual’s combination of investments.
Short Selling: Selling stocks that the investor does not own in order to bet on a price decline.
Stock: A type of investment that represents ownership in a company.
Value Investing: A style of investing that focuses on buying stocks of companies that are undervalued.
Volatility: The amount of uncertainty in the price of a stock or other financial instrument.
Yield: The percentage return on an investment.
These are just a few of the terms used in the investing world, and having a basic understanding of each of them can make it much easier to make educated decisions when it comes to investing. Knowing the terminology is just one part of the equation, but it is an important piece of the puzzle.
