PERSONAL FINANCE

Active Trading

Frequently buying and selling investments in the short term to profit from market movements.

Asset Allocation

How an investor divides investments among asset classes—stocks, bonds, cash, etc.—based on goals, time horizon, and risk tolerance.

Bond

A loan an investor makes to a company or government in exchange for periodic interest payments and repayment at maturity.

Brokerage Account

An account that allows you to buy, sell, and hold investments like stocks, bonds, and funds.

Compound Return

Earnings on both your original investment and previous interest/returns—'interest on interest.'

Coupon

The fixed interest payment a bondholder receives, usually paid semiannually.

Diversification

Spreading investments across different assets to reduce risk.

Dividend

A company’s profit paid to shareholders, usually quarterly.

Dollar-Cost Averaging

Investing a fixed amount on a regular schedule regardless of market conditions.

Exchange-Traded Fund (ETF)

A diversified investment fund traded on stock exchanges like a stock.

Index Fund

A passive mutual or exchange-traded fund designed to track a market index such as the S&P 500.

Inflation

A sustained increase in prices over time, reducing purchasing power.

Investing

Using money with the expectation of generating future returns.

Investment

An asset purchased with the goal of earning income or appreciation.

Mutual Fund

A professionally managed investment fund pooling money from many investors to buy diversified assets.

Passive Investing

Long-term, low-activity investing—typically using index funds.

Pension

Employer-funded retirement income paid out regularly after retirement.

Portfolio

A person’s collection of financial investments.

Purchasing Power

The amount of goods and services money can buy.

Rate of Return

The gain or loss on an investment over time, expressed as a percentage.

Risk

The possibility of losing some or all of an investment.

Roth IRA

A retirement account funded with after-tax income; withdrawals in retirement are tax-free.

S&P 500

A stock market index tracking 500 large U.S. companies—major benchmark for market performance.

Shareholder

Someone who owns shares of a company and has ownership rights.

Social Security

Government-provided retirement, disability, and survivor income benefits in the U.S.

Stock

Represents ownership in a company and a claim to part of its profits.

Traditional IRA

Retirement account funded with pre-tax money—taxes are paid upon withdrawal.

Traditional 401(k) Plan

Employer-sponsored retirement account allowing pre-tax contributions invested for future growth.

Singapore CPF (Central Provident Fund)

Singapore’s mandatory savings program for retirement, housing, and healthcare—funded by employer and employee contributions.