Investing Glossary

Shares of a large, financially stable, well-established company with a long track record.

The total market value of all a company's outstanding shares.

A loan made to a company or government that pays interest over a set period.

A basket of securities that trades on an exchange like a single stock.

The annual fee a fund charges, expressed as a percentage of assets.

A fund that tracks a market index like the S&P 500, owning all its components.

A pooled investment vehicle managed by a professional fund manager.

How you divide your portfolio across stocks, bonds, cash, and other assets.

Earning returns on both your original investment and your accumulated gains.

The original purchase price of an investment, used to calculate gains or losses.

Spreading investments across different assets to reduce overall risk.

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

Attempting to predict market movements and buy/sell accordingly.

Restoring your portfolio to its target allocation after market movements.

Your ability — financially and emotionally — to handle investment losses.

Investment performance including both price appreciation and income (dividends/interest).

A period of declining stock prices, typically defined as a 20%+ drop from recent highs.

A period of rising stock prices, typically defined as a 20%+ gain from recent lows.

A pullback of 10–20% from recent market highs.

A significant economic decline lasting at least two consecutive quarters.

The movement of investment capital from one industry sector to another as the economic cycle changes.

The degree of price fluctuation in an asset over time.

A cash payment a company makes to shareholders, usually quarterly.

Annual dividends paid as a percentage of the stock's current price.

The percentage of earnings a company pays out as dividends.

An employer-sponsored retirement savings plan with pre-tax contributions and potential employer match.

A triple-tax-advantaged account for medical expenses that doubles as a retirement vehicle.

A retirement account funded with after-tax dollars; growth and withdrawals are tax-free.

A retirement account funded with pre-tax dollars; you pay taxes when you withdraw.

A measure of how much a stock moves relative to the broader market.

A company's net profit divided by the number of outstanding shares.

Cash a company generates after accounting for capital expenditures.

Price-to-earnings ratio — how much investors pay per dollar of a company's earnings.