Investing

active trading

Buying and selling investments - typically individual stocks and funds - within a short time frame (from seconds/minutes to days/weeks) in hopes of making quick profits from the small price changes. Research shows that 95% of active traders lose money.

asset allocation

Dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash

bond

A security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond's maturity date

brokerage account

An account that lets individual investors trade stocks, bonds, mutual funds, and other investments

compound return

The growth of an investment where earnings, such as dividends or interest, are reinvested to generate additional earnings over time

coupon

The annual interest payment on a bond, usually expressed as a percentage of its face value

diversification

The practice of investing in a large variety of stocks, bonds, and/or funds as a way to reduce your overall risk

dividend

Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis

dollar cost averaging

The practice of putting a fixed amount into an investment over a period of time, regardless of the price of that investment

ETF

A collection of stocks and/or bonds that are traded on securities exchanges. Unlike mutual funds, they can be traded throughout the day like an individual stock.

index fund

A low-fee portfolio of stocks chosen to track or mimic a stock market index, thereby removing the human element of investing because no one is choosing the individual stocks

individuak retirement

An investing tool for individuals to earmark funds specifically for their retirement

inflation

The rate at which the price of goods increases and consumer purchasing power decreases over time

investing

Allocating money with the expectation of generating profit over time.

investment

An asset or item that is acquired with the goal of making a profit  

mutual fund

A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor

passive investing

A long-term strategy for building wealth by buying investments - typically index funds - and holding them for many years to minimize trading and costs. Research shows that 85-95% of passively managed funds perform better than actively managed funds over the long run.

pension

A retirement account, offered in some job sectors or companies, that an employer maintains to give an employee a fixed payout at retirement

portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs

purchasing power

The number of goods and services that money can buy. It can weaken in time due to inflation.

rate of return

The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)

risk

A situation involving exposure to danger, harm, or loss

robo advisor

An online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners

roth ira

retirement account

the money you deposted has already been taxed

sp 500

An index of 500 large cap companies chosen based on their size, industry, and other factors, used to represent the entire market

shareholder

A person, company, or institution that owns that least one share in a company

social security

A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals

stock

A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company

TDF

A type of investment fund that rebalances its asset mix over time based on a projected retirement year

traditional IRA

An individual retirement account

dont have to pay taxes on it until you withdraw it

traditional 401k plan

A retirement savings plan, sponsored through your employer who will often match your contributions, that allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn