Plain-language reference
The Investing Dictionary
Clear, cross-linked explanations of the terms you meet while learning to invest. Start with a word, not a recommendation.
Terms found: 20
- A
- Asset Allocation
Asset allocation is the decision about how much of a portfolio belongs in broad investment categories.
- B
- Bond
How lending to an issuer creates contractual payments, and how rates, credit quality, maturity, and liquidity affect value.
- C
- Capital Gain
A capital gain is the increase recognized when an asset is sold for more than its relevant cost basis.
- Compound Interest
Compound interest is interest earned on principal plus previously credited interest.
- D
- Diversification
Diversification spreads exposure across investments so one disappointment has less power over the whole portfolio.
- Dividend
A dividend is a distribution a company makes to shareholders, commonly in cash or additional shares.
- E
- ETF
How exchange-traded funds combine a pooled portfolio with intraday share trading, plus the costs and structural risks to inspect.
- I
- Index Fund
How a fund seeks to track a chosen index, why tracking is never exact, and which costs and methodology choices matter.
- Investing
How committing money to assets differs from saving or speculating, and why time, risk, costs, and goals matter.
- M
- Market Capitalization
Market capitalization is the market value of a company's outstanding equity shares.
- Market Index
How an index turns a selected basket and weighting method into a benchmark, and what its headline return leaves out.
- Mutual Fund
How an open-end mutual fund pools investor money, prices shares at NAV, distributes returns, and charges costs.
- P
- P/E Ratio
The price-to-earnings ratio compares a share's market price with earnings per share.
- Portfolio
A portfolio is the complete collection of investments held by a person or institution.
- R
- Risk and Return
Return is an investment's gain or loss; risk is uncertainty about outcomes and the possibility of losing money.
- S
- S&P 500
What the S&P 500 measures, how float-adjusted market-cap weighting shapes it, and why it is not the entire U.S. market.
- Stock
What a share of stock represents, how shareholders may earn returns, and why ownership can still lose all its value.
- Stock Exchange
What an exchange does, how listing differs from trade execution, and why an exchange is only one part of the market.
- Stock Market
The network in which shares are issued, routed, quoted, and traded—not one building or one exchange.
- V
- Volatility
Volatility describes how widely and rapidly an investment's price or returns fluctuate.