investing vocab

Active Trading

Buying and selling stocks or funds quickly (within minutes to days) to try and make small profits from price changes.

Asset Allocation

Dividing your investments into different types (stocks, bonds, cash) to reduce risk.

Asset Class

A group of similar financial products that behave in similar ways in the market.

Bear Market

A market where prices are dropping, causing people to sell.

Bond

A loan to a company or government that pays you interest and returns your money after a set time.

Bond Rating

A score that indicates how likely it is that you'll get your money back from a bond.

Brokerage Account

An account that allows you to buy and sell stocks, bonds, and other investments.

Bull Market

A market where prices are rising, and people are buying more stocks.

Capital Gain

Profit made from selling something for more than you paid for it.

Capital Gains Tax

A tax on the profit made when selling an asset.

Compound Return

The way your investment grows over time when the money you earn is reinvested.

Coupon

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

Diversification

The practice of spreading your investments across many different assets to reduce risk.

Dividend

A portion of a company's profits paid to shareholders, typically every few months.

Dollar Cost Averaging

Investing a fixed amount of money at regular times, regardless of investment price.

Exchange-Traded Fund (ETF)

A collection of stocks or bonds traded on the stock market like stocks.

Index Fund

A low-cost investment that follows the performance of a specific stock market index.

Individual Retirement Account (IRA)

A special account that allows you to save money for retirement with tax advantages.

Inflation

The increase in the cost of goods and services over time.

Insider Trading

The illegal act of using non-public information to trade a company’s stock.

Investing

The process of putting money into something with the goal of making a profit.

Investment

An asset bought with the goal of making money in the future.

Market Capitalization

The total value of a company’s shares calculated by multiplying share price by the number of shares.

Micro-Investing Platform

An app that helps people save small amounts of money regularly for investing.

Municipal Bond

A bond issued by a local government used to fund public projects, often tax-free.

Mutual Fund

A fund made up of stocks or bonds that is managed and bought/sold as one unit.

Nasdaq

The second-largest stock exchange in the world, based in the U.S.

New York Stock Exchange (NYSE)

The largest stock exchange in the world, located in New York City.

Nominal Rate of Return

The return on an investment that does not consider inflation or taxes.

Passive Investing

A long-term investing strategy where you buy investments and hold them for many years.

Pension

A retirement plan provided by some employers, offering a fixed payout upon retirement.

Portfolio

A collection of financial investments like stocks, bonds, and cash.

Purchasing Power

The amount of goods and services money can buy, decreasing over time due to inflation.

Rate Of Return

The profit or loss on an investment compared to the original amount invested.

Real Rate Of Return

The return on an investment that accounts for inflation and taxes.

Risk

The chance that an investment might not make money or lose value.

Robo-Advisor

A service giving automated investment advice using algorithms.

Roth IRA

A retirement account where savings are made after taxes and withdrawals are tax-free.

Shareholder

A person or entity that owns at least one share of a company.

Security

A financial asset, like a stock or bond, that can be traded on the market.

S&P 500

An index of 500 of the largest U.S. companies, representing the overall market.

Social Security

A government program providing financial benefits to retirees, disabled individuals, and families.

Stock

A share in the ownership of a company.

Stock Exchange

A place where stocks of companies are bought and sold.

Target Date Fund (TDF)

An investment fund that automatically adjusts its mix of stocks and bonds over time.

Treasury Bond

A long-term, risk-free bond issued by the U.S. government.

Traditional IRA

A retirement account where savings are made before taxes, taxed upon withdrawal.

Traditional 401(k) Plan

A retirement savings plan where contributions grow tax-free until withdrawal.