Investing Glossary

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

A stock whose performance closely tracks the ups and downs of the broader economy.

A stock that tends to hold up well during economic downturns, regardless of the business cycle.

A durable competitive advantage that protects a company's profits from competitors.

The number of a company's shares actually available for public trading.

A company with a market capitalization typically above $10 billion.

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

A company with a market capitalization typically between $300 million and $2 billion.

A fund management approach where a manager actively picks investments trying to beat the market.

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

A measure of how much a bond or bond fund's price will move for every 1% change in interest rates.

The return an investor earns on a bond, expressed as a percentage of its price.

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.

An investment strategy that tracks a market index rather than trying to beat it through active stock-picking.

A debt security issued by the US government to fund its operations.

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

The study of how psychology and emotion cause investors to make irrational financial decisions.

An investment strategy of purchasing assets and holding them for the long term regardless of short-term volatility.

The profit earned when an investment is sold for more than its original purchase price.

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

The added risk of having too much of a portfolio invested in a single stock, sector, or asset.

How closely two investments move in relation to each other.

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.

Investing a large amount of money all at once rather than spreading it out over time.

Attempting to predict market movements and buy/sell accordingly.

When a portfolio's actual allocation moves away from its intended target due to market movements.

Investment performance measured only by price change, excluding dividends or interest.

Restoring your portfolio to its target allocation after market movements.

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

A specific batch of shares purchased at the same time and price, tracked separately for tax purposes.

Selling an investment at a loss to offset capital gains and reduce your tax bill.

How long you plan to hold an investment before you need the money.

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.

The natural, recurring pattern of economic expansion and contraction over time.

Buying more of an investment after its price has fallen, on the belief the decline is temporary.

Gross Domestic Product — the total value of all goods and services produced in a country.

An investment approach based on big-picture economic trends rather than individual company analysis.

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

The recurring pattern of expansion and contraction that markets move through over time.

A significant economic decline lasting at least two consecutive quarters.

A stock market index tracking 500 of the largest publicly traded US companies.

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

The percentage of the labor force that is jobless and actively seeking work.

The degree of price fluctuation in an asset over time.

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

A company increasing the amount of its dividend payment year over year.

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

An investing strategy focused on generating regular cash payouts rather than primarily capital appreciation.

The percentage of earnings a company pays out as dividends.

Using investment income — dividends, interest, or capital gains — to buy more shares instead of cashing out.

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

The maximum amount the IRS allows an individual to deposit into a retirement account each year.

Money an employer contributes to your retirement account based on your own contributions.

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

A health insurance plan with a higher deductible that qualifies the holder to contribute to an HSA.

The minimum amount the IRS requires you to withdraw annually from certain retirement accounts after a certain age.

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

An account that offers special tax benefits, like tax-free growth or tax-deductible contributions.

Investment growth that isn't taxed until money is withdrawn, typically in retirement.

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

The schedule by which you gain full ownership of employer-contributed retirement funds or stock.

A financial statement showing what a company owns, owes, and is worth at a single point in time.

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

Money a company spends on long-term physical assets like equipment, property, or technology.

How far a price has fallen from its recent high, in percent.

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

A company's quarterly disclosure of its financial results to investors.

The price area between the moving averages Wealth Catchers watches on a daily or weekly chart.

Cash a company generates after accounting for capital expenditures.

A company's own forecast of its future financial performance.

Moving Average Convergence Divergence: a momentum measure built from two price averages.

A company's total profit after all expenses, taxes, and costs are subtracted from revenue.

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

A 0–100 momentum gauge that compares recent gains with recent losses.

The average closing price over a set number of trading sessions or weeks.

A statistical measure of how much an investment's returns vary from its average return.

An estimate of what a company or asset is actually worth, compared to its market price.