Investing Glossary

Educational only, not financial advice. These are simplified, general definitions to help you understand common terms. Exact meanings and rules can vary by country and product. Investing involves risk, including the loss of money you invest.

How to Use This Glossary

Skim it once, then keep it nearby when you read about investing. If a term shows up in an article, a fund document, or your retirement account, look it up here first. Terms are in alphabetical order.

A–C

1. Accumulating fund: a fund that automatically reinvests any income (like dividends) back into the fund instead of paying it out to you.

1. Active fund: a fund where a manager picks investments with the aim of beating the market, usually at a higher cost than an index fund.

1. Annual return: how much an investment gained or lost over one year, usually shown as a percentage.

1. Asset: anything with value that you own, such as cash, shares, bonds, or property.

1. Asset allocation: how your money is split between different types of assets, such as shares, bonds, and cash.

1. Bear market: a period when prices fall significantly (often described as 20% or more from a recent high) and investor mood is gloomy.

1. Bond: a loan you make to a government or company, which usually pays you interest and returns your money at a set date.

1. Broker / platform: a company that lets you buy, sell, and hold investments, usually through an app or website.

1. Bull market: a period when prices rise over time and investor mood is generally optimistic.

1. Capital gain: the profit you make when you sell an investment for more than you paid for it.

1. Compound growth: when the returns on your investment start earning returns themselves, helping growth snowball over time.

1. Correction: a smaller fall in prices, often described as around 10% from a recent high.

D–I

1. Diversification: spreading your money across many different investments so that one doing badly has less impact on the whole.

1. Dividend: a portion of a company's profits paid out to its shareholders.

1. Dollar-cost / pound-cost averaging: investing a fixed amount at regular intervals, so you buy more units when prices are low and fewer when they're high.

1. Emergency fund: cash set aside in accessible savings to cover unexpected expenses, so you don't need to sell investments in a hurry.

1. Equity: another word for shares (stocks), meaning ownership in a company.

1. ETF (exchange-traded fund): a fund that trades on a stock exchange throughout the day, like a share, and often tracks an index.

1. Expense ratio / ongoing charge: the yearly fee a fund charges, shown as a percentage of the money you have invested.

1. Fund: a pool of money from many investors that's invested together in a range of assets.

1. Index: a list of investments that represents a part of the market, used to measure how that part of the market is performing.

1. Index fund: a fund that aims to match the performance of an index rather than trying to beat it.

1. Inflation: the general rise in prices over time, which reduces what your money can buy.

1. Interest rate: the percentage charged for borrowing money or earned for lending or saving it.

L–R

1. Liquidity: how quickly and easily you can turn an investment into cash without a big loss in value.

1. Market capitalisation (market cap): the total value of a company's shares, calculated as share price times number of shares.

1. Net worth: everything you own (assets) minus everything you owe (debts).

1. Passive investing: a strategy of buying and holding broad index funds instead of trying to pick winners or time the market.

1. Portfolio: the full collection of investments you own.

1. Rebalancing: adjusting your investments back to your target mix after market movements have shifted it.

1. Retirement account: an account designed for retirement saving, often with tax benefits, whose rules depend on your country.

1. Return: the gain or loss on an investment, including price changes and any income.

1. Risk tolerance: how much ups and downs in value you can handle, both financially and emotionally.

S–V

1. Share (stock): a unit of ownership in a company.

1. Stock exchange: a regulated marketplace where shares and other investments are bought and sold.

1. Tax-advantaged account: an account that offers tax benefits for saving or investing, with rules that vary by country.

1. Time horizon: how long you plan to keep your money invested before you need it.

1. Tracking difference: how much a fund's return differs from the index it tracks, often due to fees and costs.

1. Valuation: an estimate of what an investment is worth, often compared with its price to judge if it seems cheap or expensive.

1. Volatility: how much and how quickly an investment's price moves up and down.

Quick Self-Quiz

Cover the definitions and try to explain these in your own words:

Words to Be Careful Around

If you see these in a pitch, slow down and ask questions:

• "Guaranteed returns" — investments that can grow also carry risk.

• "Can't lose" — every investment can lose value.

• "Limited time only, act now" — pressure is a common sign of a scam.

• "Secret strategy" — legitimate investing basics aren't secret.

Always check that a firm is authorised by your country's financial regulator before investing.

Sample product from a Fora-made demo creator page. Educational only, not financial advice.