Thread by @FinFreeWizard

Investing Jargon Confusing You?

Jargon helps financial experts generate fees

Wanna make it easier for beginners

Rapid Fire Investing terms simplified:

Feel free to add any I missed pros

🧵

ETF - Basket of stocks that tracks an Index, sector or other theme

Index - Fund that tracks a market index like the S&P 500

Bond - Loan you give in exchange for interest rate backed by a government or company

Shares - Piece of a company that you own

Equity - Shares of a company

Speculation - Betting on the movement of a stock price

Investing - Buying an asset based on understanding and intention to own for a long period

Annual Report - A company’s yearly summary of performance

Share Buybacks - Company buying its own stock

Long - I own the stock

Short - I am better on stock price falling

Asset - Stocks, Bonds, Property, Crypto

Market Price - Current value of an asset

Dividends - Part of company profits paid to shareholders

Ex-dividend - The interval between announcement and payment of dividend

Leverage - Normally debt owed

Share Dilution - Increasing number of outstanding shares

Capital - Funds invested in a company for long term

Capital Gains - Profit made on your investments, liable for tax

Diversification - Holding different types of stocks and assets to spread risk

Buy-And-Hold - Buy to own for the long term

Trading - Buy to sell in the short term

Special Situation - There’s been some short term event that’s driven down stock price

Asset Allocation - Breaking your investments up into different buckets or asset types

Portfolio - This is all the investments you own

Security - Stocks, Bonds or cash

Bear Market - A 20% decline in the stock market

Bull Market - Prices going upwards

Blue Chip - Big reliable company. Borrowed from poker

Dollar Cost Average - Invest consistently every month

Fund - A bunch of money managed by an investment firm that individuals can invest in

Expense Ratio - Fees charged for managing a fund, normally between 0 and 5%

Management Fee - Paid by fund to investment advisor

Growth Stock - A company that is experiencing rapid growth

Value Stock - A company with a current slow growth rate but solid financial position

Sector - A group of similar stocks e.g. Technology

Risk Tolerance - The amount of risk you can handle

Volatility - An asset the frequently goes up and down a lot in price

Inflation - A rise in the cost of goods and services

Debt - Money borrowed

Liquidity - Access to cash

Interest Rate - % agreed to pay on a loan

Yield - Annual % return on your capital

Large Cap - Market Value of more than $10bn

Mid Cap - $3bn to $$10bn

Small Cap - $500m to $3bn

Micro Cap - Below $500m

Company Earnings - Company profits

Price to Earnings (P/E) Ratio - Stock price divided by earnings per share

IPO - Initial Public Offering; company sells shares on stock market for first time

Recession - Economy is under performing

Boom - Economy is over performing

52 wk high - Highest price for the stock over 12 months

52 wk low - Lowest price for the stock over 12 months

If you got something from this then follow me @FinFreeWizard for more Financial Freedom value

P.S.

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