A to Z of Investment Terms

A to Z of Investment Terms

Investing can be a daunting endeavour, especially when faced with a multitude of unfamiliar terms and jargon. To help demystify the world of investments, we have compiled a simple A-to-Z guide of the most used terms in investment. Whether you are a beginner or looking to brush up on your investment knowledge, this guide will provide you with a clear understanding of key investment concepts. 

A - Assets: Anything of value that an individual or company owns, such as stocks, bonds, real estate, or cash. 

B - Bull Market: A market condition characterized by rising prices and optimism among investors. 

C - Compound Interest: Earning interest on both the initial investment and the accumulated interest over time, leading to exponential growth. 

D - Diversification: Spreading your investments across different asset classes, sectors, or geographic regions to reduce risk. 

E - Equity: Ownership in a company, typically represented by shares of stock. 

F - Fixed Income: Investments that provide a fixed return, such as bonds or fixed deposit accounts. 

G - Growth Stocks: Stocks of companies expected to grow at an above-average rate compared to the overall market. 

H - Hedge Fund: An investment fund managed by professional managers that uses various strategies to aim for high returns while minimizing risk. 

I - Inflation: Inflation refers to the increase in the price of goods and services over time.

J - Junk Bonds: These are debts issued by companies or governments which are at high risk of default. Their levels of interest are high to compensate for the risks involved to the bondholder.

K - KYC (Know Your Customer): The process of verifying the identity of investors to comply with anti-money laundering regulations. 

L - Liquidity: The ease with which an investment can be bought or sold without significantly impacting its price. 

M - Market Capitalisation (Market Cap): The total value of a company’s shares, calculated as the total number of shares multiplied by the current share price.

N - Net Asset Value (NAV): The value of a Unit Trust fund's assets minus its liabilities, divided by the number of outstanding shares. 

O - Options: Financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specific timeframe. 

P - Portfolio: A collection of investments, such as stocks, bonds, and funds, owned by an individual or institution. 

R - Return on Investment (ROI): A measure of the profitability of an investment, typically expressed as a percentage. 

S - Stock Market: A marketplace where buyers and sellers trade stocks and other securities. 

T - Treasury Bonds: Debt securities issued by governments, considered one of the safest investments. 

U - Unit Trust: A collective investment scheme where investors pool their money to invest in a diversified portfolio managed by a professional fund manager. 

V - Volatility: The degree of price fluctuations in the market or the price of a particular investment. 

W - Withdrawal: Taking money out from an investment or bank account. 

Y - Yield: The income generated by an investment, usually expressed as a percentage. 

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