Use this glossary to understand common financial and investment terms. This reference is designed for educational purposes.
- Asset
- Anything of value that can be converted into cash, including stocks, bonds, real estate, and other investments.
- Asset Allocation
- The strategy of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash.
- Bear Market
- A market condition where prices are falling or expected to fall, typically defined as a decline of 20% or more from recent highs.
- Bond
- A debt instrument where an investor loans money to an entity (government or corporation) that borrows the funds for a defined period at a variable or fixed interest rate.
- Benchmark
- A standard against which the performance of a security, mutual fund, or investment manager can be measured.
- Bull Market
- A market condition where prices are rising or expected to rise.
- Capital Gains
- The profit earned when an investment is sold for more than its purchase price.
- Compound Interest
- Interest calculated on both the initial principal and the accumulated interest from previous periods.
- Diversification
- A risk management strategy that involves spreading investments across various financial instruments, sectors, and other categories.
- Dividend
- A distribution of a portion of a company's earnings to its shareholders.
- Exchange-Traded Fund (ETF)
- A type of investment fund that trades on stock exchanges, typically tracking an index, commodity, or basket of assets.
- Index
- A statistical measure of changes in a representative group of stock prices, such as the S&P 500 or Straits Times Index.
- Inflation
- The rate at which the general level of prices for goods and services rises, eroding purchasing power.
- Liquidity
- The ease with which an asset can be converted into cash without significantly affecting its market price.
- Market Capitalization
- The total market value of a company's outstanding shares, calculated by multiplying share price by number of outstanding shares.
- Mutual Fund
- An investment vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, and other assets.
- Portfolio
- A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents.
- Risk Tolerance
- The degree of variability in investment returns that an investor is willing to withstand.
- Stock
- A security that represents the ownership of a fraction of a corporation.
- Volatility
- A statistical measure of the dispersion of returns for a given security or market index.
- Yield
- The income return on an investment, such as interest or dividends received.
Additional Resources
For more detailed information about these terms and concepts, we recommend consulting additional educational resources or speaking with a qualified financial professional.
Important Disclaimer
This glossary is for educational purposes only and does not constitute financial advice. Always consult with qualified professionals before making investment decisions.