Investment Glossary

A

Active Investing

An investment approach in which securities are actively selected and managed with the objective of achieving a particular investment outcome or outperforming a benchmark. Learn more about Active vs Passive Investing.

Asset

Something with economic value that can be owned or invested in. Financial assets can include stocks, bonds, funds, cash, real estate, commodities, and other investments.

Asset Allocation

The process of dividing a portfolio among different asset classes according to investment objectives, time horizon, and risk considerations. Learn more about Asset Mix.

Asset Class

A category of investments that share similar characteristics. Common asset classes include equities, fixed income, cash, real estate, and commodities.

Appreciation

An increase in the market value of an asset over time.

B

Bear Market

An extended period of broadly declining market prices, commonly associated with weaker investor sentiment and increased uncertainty. Learn more about Bull & Bear Markets.

Benchmark

A standard or market index used as a reference point when evaluating the performance of an investment or portfolio.

Bid-Ask Spread

The difference between the highest price a buyer is willing to pay for an asset and the lowest price a seller is willing to accept.

Bond

A debt security through which an investor lends money to a government, corporation, or other issuer in exchange for interest payments and the repayment of principal. Learn more about Bonds & Fixed Income.

Bull Market

An extended period during which market prices generally rise and investor sentiment is typically more positive. Learn more about Bull & Bear Markets.

C

Capital

Financial resources that can be saved, invested, or used to fund economic activity.

Capital Gain

The increase in value realized when an investment is sold for more than its acquisition cost.

Capital Loss

A loss that occurs when an investment is sold for less than its acquisition cost.

Capital Preservation

An investment objective that places greater emphasis on protecting existing capital from significant losses. Learn more about Capital Preservation.

Commodity

A basic physical good such as oil, natural gas, gold, metals, or agricultural products that can be traded in financial and physical markets. Learn more about Commodities.

Compound Growth

Growth that occurs when investment returns remain invested and can generate additional returns in later periods. Learn more about Compound Growth.

Concentration Risk

The risk created when a large portion of a portfolio depends on a single investment, company, sector, market, or asset class. Learn more about Concentration Risk.

Correction

A meaningful decline in market prices from a recent high, generally occurring over a shorter period than a prolonged bear market. Learn more about Market Corrections.

Credit Risk

The possibility that a borrower or bond issuer may fail to make required interest or principal payments.

D

Digital Asset

An asset represented and transferred digitally, often using distributed ledger or blockchain technology. Learn more about Digital Assets.

Diversification

The practice of spreading investments across different assets, sectors, markets, or regions to reduce dependence on any single exposure. Learn more about Portfolio Diversification.

Dividend

A distribution of company earnings or other available capital to shareholders, usually paid in cash or additional shares.

Drawdown

The decline in the value of an investment or portfolio from a previous peak to a subsequent low point.

Duration

A measure commonly used in fixed-income investing to estimate how sensitive a bond's price may be to changes in interest rates.

E

Economic Cycle

The recurring movement of economic activity through periods such as expansion, slowdown, recession, and recovery. Learn more about Economic Cycles.

Equity

Ownership in a company. Publicly traded equity is commonly represented by shares of stock.

ETF

An exchange-traded fund is a pooled investment vehicle whose shares trade on a securities exchange. Learn more about Funds & ETFs.

F

Fixed Income

A category of investments based primarily on debt instruments, including government and corporate bonds. Learn more about Fixed Income.

Fund

An investment vehicle that pools money from multiple investors and invests that capital according to a defined strategy.

Fundamental Analysis

The evaluation of an investment using factors such as financial statements, profitability, cash flow, economic conditions, and business fundamentals.

G

Growth Investing

An investment approach focused on companies expected to expand revenue, earnings, or business activity at relatively strong rates. Learn more about Growth Investing.

Gross Return

Investment return measured before certain costs, fees, taxes, or other deductions are taken into account.

H

Holding Period

The length of time an investor owns an investment before selling or otherwise disposing of it.

Hedge

An investment position or strategy intended to reduce exposure to a particular financial risk.

I

Income Investing

An investment approach that emphasizes recurring income from sources such as dividends, bond interest, or real estate. Learn more about Income Investing.

Index

A statistical measure designed to represent the performance of a defined group of securities or a particular segment of a financial market.

Inflation

A broad increase in the prices of goods and services that reduces the purchasing power of money over time. Learn more about Inflation.

Interest Rate

The cost of borrowing money or the return associated with lending capital, usually expressed as a percentage. Learn more about Interest Rates.

Investment Risk

The possibility that actual investment outcomes may differ from expectations, including the possibility of losing some or all invested capital. Learn more about Investment Risk.

Investment Time Horizon

The period between investing capital and the expected date when that capital will be needed for a financial objective. Learn more about Investment Time Horizon.

L

Leverage

The use of borrowed capital or financial instruments to increase investment exposure. Leverage can magnify both gains and losses.

Liquidity

The ability to convert an asset into cash relatively quickly without significantly affecting its market price.

Liquidity Risk

The risk that an investment cannot be sold quickly or efficiently at a price close to its expected market value. Learn more about Liquidity Risk.

Long-Term Investing

An investment approach focused on maintaining investments over an extended period rather than reacting primarily to short-term market movements. Learn more about Long-Term Investing.

M

Market Capitalization

The total market value of a company's outstanding shares, generally calculated by multiplying its share price by the number of shares outstanding.

Market Risk

The possibility that broad changes in financial markets may reduce the value of an investment or portfolio. Learn more about Market Risk.

Market Volatility

The degree and frequency with which market prices move higher or lower over a particular period. Learn more about Market Volatility.

Maturity

The date on which the principal amount of a bond or other debt instrument is scheduled to be repaid.

Mutual Fund

A pooled investment vehicle that collects capital from multiple investors and invests according to a defined investment strategy.

N

Net Return

Investment return remaining after applicable investment costs or other specified deductions have been taken into account.

Nominal Return

The percentage return on an investment before adjusting for the effect of inflation.

P

Passive Investing

An investment approach commonly designed to track a market index or predefined portfolio rather than frequently selecting securities based on short-term forecasts. Learn more about Active vs Passive Investing.

Portfolio

A collection of investments owned or managed together, potentially including multiple asset classes and investment strategies.

Portfolio Rebalancing

The process of adjusting portfolio holdings to bring the asset mix back toward its intended allocation. Learn more about Portfolio Rebalancing.

Principal

The original amount of capital invested, borrowed, or lent before returns, interest, gains, or losses are considered.

Private Markets

Investments in assets that are not traded on public securities exchanges, including areas such as private equity and private credit. Learn more about Private Markets.

Purchasing Power

The amount of goods and services that a particular amount of money can purchase. Inflation generally reduces purchasing power over time.

R

Real Estate Investment

Capital invested directly or indirectly in residential, commercial, industrial, or other property-related assets. Learn more about Real Estate Investing.

Real Return

Investment return after accounting for the effect of inflation.

Rebalancing

Adjusting portfolio holdings when market movements or other changes cause the portfolio to move away from its intended asset allocation.

Return

The gain or loss generated by an investment over a particular period, often expressed as a percentage of the amount invested.

Risk

The uncertainty surrounding an investment outcome and the possibility that actual results may differ from what was expected.

Risk-Adjusted Return

A way of evaluating investment performance while considering the amount of risk taken to generate that return.

Risk Tolerance

The degree of investment uncertainty and potential loss an investor is prepared to accept.

S

Sequence-of-Returns Risk

The risk that the timing of investment gains and losses can negatively affect a portfolio when withdrawals are being made, particularly near or during retirement.

Share

A unit representing ownership in a company or an interest in certain pooled investment vehicles.

Stock

A security representing an ownership interest in a corporation. Learn more about the Stock Market.

Systematic Investing

An investment approach based on predefined rules, models, schedules, or other repeatable decision-making processes. Learn more about Systematic Investing.

T

Thematic Investing

An investment approach that focuses on long-term themes or structural changes that may affect industries, companies, or economies. Learn more about Thematic Investing.

Total Return

The overall investment result combining changes in asset value with income such as dividends or interest.

V

Value Investing

An investment approach that looks for securities trading below an investor's assessment of their underlying or intrinsic value. Learn more about Value Investing.

Valuation

The process of estimating the economic or financial value of a company, security, or other asset.

Volatility

A measure or description of how much the price of an investment changes over time. Higher volatility generally indicates larger price movements.

W

Wealth Preservation

The process of managing accumulated financial resources with attention to protecting their value, purchasing power, liquidity, and ability to support future needs. Learn more about Wealth Preservation.

Withdrawal

Money removed from an investment account, portfolio, fund, or other financial resource for spending or another purpose.

Y

Yield

Income generated by an investment relative to its price or value, usually expressed as a percentage.

Yield Curve

A representation of interest rates or yields across bonds with different maturity dates, commonly used when analyzing fixed-income markets and economic conditions.