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.

R

Real return

Real return is a measure of investment performance that accounts for the eroding effects of inflation. While a nominal return…

Full Definition
R

Rebalancing

Rebalancing is the process of realigning the weightings of a portfolio of assets by periodically buying or selling assets to…

Full Definition
S

Security

A security is a tradable financial instrument that holds monetary value and represents ownership, a creditor relationship, or the right…

Full Definition
T

Total return

Total return is a comprehensive measure of an investment’s performance that captures all sources of value change over a given…

Full Definition
Investment horizon An investment horizon is the total length of time an investor expects to hold a security or a… Nominal return Nominal return is the percentage gain or loss on an investment before adjusting for the effects of inflation.… Passive investing Passive investing is a long-term investment strategy that aims to match the performance of a broad market index,… Real return Real return is a measure of investment performance that accounts for the eroding effects of inflation. While a… Rebalancing Rebalancing is the process of realigning the weightings of a portfolio of assets by periodically buying or selling… Risk tolerance Risk tolerance is the degree of variability in investment returns that an individual is willing to withstand as… Risk-return tradeoff The risk-return tradeoff is a fundamental concept in investing that describes the direct relationship between the potential reward… Rule of 72 The Rule of 72 is a simple, widely used mental math shortcut that estimates how long it will… Security A security is a tradable financial instrument that holds monetary value and represents ownership, a creditor relationship, or… Standard deviation Standard deviation is a statistical measure that quantifies the amount of variation or dispersion in a set of… Time value of money The time value of money (TVM) is a core concept in finance that describes how a sum of… Total return Total return is a comprehensive measure of an investment’s performance that captures all sources of value change over…