Investment Basics
The process of buying assets like stocks, bonds, or real estate with the expectation of making a profit
investing
The possibility of losing money on a investment.
risk
The place where stocks are bough and sold, such as the NYSE or NASDAQ.
stock exchange
The strategy involves regularly investing a fixed amount of money into an asset, regardless of it price.
dollar-cost averaging
The term refers to a stock that consistently outperforms the market over time.
market leader
The financial instrument represents ownership in a company and entitles the holder to a share of its profit.
stock
A lower-risk investment option that involves lending money to a company or government.
bond
A measurement of a stock's daily price movement compare the current price to its previous close.
Stock price change
The type of investing that focuses on companies with strong earnings growth potential, even if their stock prices are high.
growth investing
This is a stock's price divided by its earnings per share, used to evaluate its valuation.
price-to-earnings (P/E) ratio
This type of account is used to buy and sell investments like stocks and bonds.
brokerage account
The potential return an investor earns on an investment over time.
yield
A period when stock prices are rising and investors are confident.
bull market
Involves buying undervalued stocks that are expected to increase in value over time
value investing
A company's total market value is determined by multiplying its stock price by its outstanding shares.
market capitalization (market cap)
A collection of investments like stocks, bonds, and mutual funds, held by an individual or institution,
portfolio
The type of stock that generally represents well-established companies and is considered a safer investment.
blue-chip stock
A period when stock prices are falling, and investors are pessimistic.
bear market
Investors use this technique to reduce risk by spreading investments across different asset classes.
Asset allocation
A company's ability to meet short-term obligations with its liquid assets.
liquidity
The practice of spreading investments across different assets to reduce risk.
diversification
The relationship between risk and return means that higher returns generally come with this.
higher risk
An investors buys shares of stock at regular intervals, regardless of price fluctuations.
dollar-cost averaging
dividend investing
A list of your investments
portfolio