Investment Terms You Should Know

Investment becomes difficult if you don't know the meaning of some terms, let us help you understand these terms

One of the toughest and frustrating parts of starting your journey as an investor is encountering terms and phrases you do not understand. Surely this can be overwhelming in the beginning, but once you master the meaning of these terms, it becomes easier to read technical financial news.

Here we would be introducing eleven terms that you may encounter in your investment journey and a brief description of each. Hopefully, at the end of this, you will be armed with greater understanding of the terminology which will give you confidence while investing.

The first term is stock.

Stock: This is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater.

Stock Broker: A stock broker is an institution or individual who executes buy and sell orders on behalf of a customer.

Bull Market: This is when the stock market as a whole is in a prolonged period of increasing stock prices, opposite of a bear market.

Bear Market: This is a period of falling stock prices, opposite of a bull market.

Broker: A person who buys or sells an investment for you in exchange for a fee.

Dividend: This is a portion of a company’s earnings that is paid to shareholders on a quarterly or annual basis.

Initial Public Offering (IPO): The first sale or offering of a stock by a company to the public.

Portfolio: A collection of investments owned by an investor. You can have as little as one stock in a portfolio to an infinite amount of stocks.

Volatility: This refers to the price movements of a stock or the stock market as a whole. Highly volatile stocks are ones with extreme daily up and down movements.

Spread: This is the difference between the bid and the ask prices of a stock, or the amount someone is willing to buy or sell it.

Rally: A rapid increase in the general price level of the market or of the price of a stock.

Of course, there are many more investing terms you can discover to help you grow in your journey to financial independence. Keep studying, keep reading, keep researching, and then they sky becomes your stepping stone.