When it comes to investment there is a language all its own. Not everyone knows this investment language which makes navigating the investment world much more difficult. Here are terms that everyone should know, as they will help you when you are trying to invest.
How long your money will stay invested is called a time horizon.
The chance that you will win or lose with any given investment is known as risk.
Risk tolerance would be your capacity to take in financial loss. It also has to do with your emotional feelings about losing the money.
A collection of investments is referred to as an investment portfolio.
If you spread dollars across a variety of investments to try to reduce your risk, you would be doing what is called diversification or asset allocation.
If you have the ability to quickly turn investments into cash then you have liquidity.
Bonds, stocks, and other investment instruments are known as securities.
If you have a group of securities which represent a specific market or a segment of a market, then you have an index.
A facility whether it is physical or electronic that is used for the trading of securities is referred to as an exchange.
Generally you would call the return on any given investment a yield.
When securities are going down in value, it is known as a bear market.
The opposite of a bear market is when securities are going up in value, it is known as a bull market.
Use these to help you understand terms when you are investing. If you come across a word later on that you do not understand, add it to your list of terms. This will help you to learn the terms of the investment world which will help you make better investment decisions for you.
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