Investing Fundamentals Financial Terms & Definitions

26 terms in this topic

Investing Fundamentals is a glossary category that defines key concepts such as asset classes, risk and return, diversification, time value of money, and basic market mechanics. It provides foundational knowledge for beginners and serves as a reference for more advanced topics in investing.

A

Asset class

An asset class is a group of investments that share similar characteristics, behave similarly in the marketplace, and are subject…

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B

Benchmark

A benchmark is a standard or point of reference against which the performance of an investment, portfolio, or fund can…

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C

Capital gain

A capital gain is the increase in value of a capital asset—such as stocks, bonds, real estate, or mutual funds—when…

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C

Correlation

Correlation is a statistical measure that describes the degree to which two securities move in relation to each other. In…

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D

Debt

Debt is a financial obligation that occurs when one party borrows money from another. The borrower receives a sum of…

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D

Diversification

Diversification is a fundamental investment strategy that involves spreading your investments across various asset classes, industries, geographic regions, and individual…

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Active investing Active investing is a hands-on approach to building and managing an investment portfolio. Instead of simply tracking a… Asset allocation Asset allocation is the investment strategy of dividing a portfolio among different asset classes, such as stocks, bonds,… Asset class An asset class is a group of investments that share similar characteristics, behave similarly in the marketplace, and… Benchmark A benchmark is a standard or point of reference against which the performance of an investment, portfolio, or… Capital gain A capital gain is the increase in value of a capital asset—such as stocks, bonds, real estate, or… Compound interest Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest… Correlation Correlation is a statistical measure that describes the degree to which two securities move in relation to each… Debt Debt is a financial obligation that occurs when one party borrows money from another. The borrower receives a… Diversification Diversification is a fundamental investment strategy that involves spreading your investments across various asset classes, industries, geographic regions,… Dollar-cost averaging Dollar-cost averaging (DCA) is an investment strategy where a fixed dollar amount of a particular asset—such as shares… Expected return Expected return is a key concept in investing that represents the average amount of profit or loss an… Income (investment) Investment income is money you earn from your investments without having to work for it actively. Instead of…