Glossary of Investment Terms

Like any highly specialized field of endeavor, investing has its own peculiar language, terms, and jargon. Listed below are twenty-five of the most common investment terms and tools, along with their basic definitions. Take the time to learn these terms; you’ll hear them daily. As you come across more complex investment terminology, use this link to locate their meanings in the advanced glossary.

ASSETS - Resources owned by a company, fund, or individual; i.e. cash, investments, money due, materials, inventories, etc.

BEAR MARKET - A market in which prices are falling, or expected to do so.

BOND - A debt security issued by corporations, governments, or their agencies, in return for cash from lenders and investors. A bond holder is a creditor, not a shareholder.

BULL MARKET - A market in which prices are rising, or expected to do so.

COMMODITY - A tradable item that can generally be further processed and sold; i.e. metals, wheat, coal, etc.

COMPOUND INTEREST - Interest which is calculated on both the principal and interest previously earned.

DIVIDEND - The amount of a corporation’s after-tax earnings that it pays to its shareholders.

DOW JONES INDEX - A leading index of U.S. stock market prices.

FINANCIAL ANALYST - A person trained to advise on the risk and return characteristics of investments and in the management of investment portfolios.

INDEX - A numerical measure of price movement in financial markets.

INVESTMENT - An asset acquired for the purpose of producing income and/or capital gains.