Anything of value that can be owned or controlled to produce future income or appreciation in value. Examples: stocks bonds real estate commodities.
A collection of investments owned by an individual or organization. Diversification across different asset classes is key for a balanced portfolio.
A security that represents ownership in a company. Owning stock means you are a part-owner of the company and share in its profits (dividends) and losses.
A loan that you make to a company or government. In return you receive regular interest payments and the repayment of the loan amount at maturity.
A professionally managed investment fund that pools money from many investors to purchase a diversified portfolio of assets. This allows investors with limited capital to access a variety of investments.
Similar to a mutual fund but traded on a stock exchange like individual stocks. ETFs often have lower fees than mutual funds.
A type of mutual fund or ETF that tracks a specific market index such as the S&P 500. This provides broad market exposure and diversification.
The possibility of losing money on an investment. Higher potential returns are typically associated with higher risk.
The profit or loss generated by an investment over a specific period. Return can be in the form of capital appreciation (increase in value) or income (dividends interest).
Spreading your investments across different asset classes industries and geographic regions to reduce risk.
Investing a fixed amount of money in a particular asset at regular intervals regardless of the asset's price. This helps to average out the purchase price and reduce the impact of market volatility.
Earning interest on both the principal amount and the accumulated interest over time. This can significantly increase the growth of your investment over the long term.
The total value of a company's outstanding shares calculated by multiplying the share price by the number of shares outstanding.
A valuation metric that compares a company's share price to its earnings per share. A high P/E ratio may indicate that the company is overvalued while a low P/E ratio may indicate that it is undervalued.
A distribution of a portion of a company's profits to its shareholders. Dividends are typically paid quarterly or annually.
A licensed professional who buys and sells securities on behalf of investors.
A marketplace where securities are traded. Examples: New York Stock Exchange (NYSE) Nasdaq.
A general increase in prices and a decline in the purchasing power of money.
A significant decline in economic activity that lasts for an extended period.
A professional who provides personalized investment advice and guidance.
An online platform that uses algorithms to provide automated investment advice and portfolio management.
A type of mutual fund or ETF designed to automatically adjust its asset allocation over time based on an investor's target retirement date.
A retirement savings plan offered by many employers in the United States. Employees contribute pre-tax dollars from their paycheck and employers may also contribute matching funds.
A retirement savings plan that allows individuals to save for retirement on a tax-advantaged basis.
A type of IRA that allows after-tax contributions to grow tax-free and be withdrawn tax-free in retirement.
An annual fee charged by mutual funds and ETFs to cover their operating expenses.
Various costs associated with investing such as commissions management fees and transaction fees.
The length of time you plan to hold an investment. This is an important factor to consider when choosing investments as different investments have different risk and return profiles over different time horizons.