Asset: Anything of value you can invest in, such as stocks, bonds, real estate, or commodities.
Bond: A type of investment where you lend money to a company or government in exchange for regular interest payments.
Compound Growth (Compounding): When investment earnings generate their own earnings over time, causing money to grow faster.
Credit Risk: The risk that a borrower, like a company or government, may fail to repay a loan or bond.
Diversification: Spreading investments across multiple assets, sectors, or regions to reduce risk.
Dividend: A portion of a company’s profits paid to its shareholders.
Emergency Fund: Savings set aside to cover unexpected expenses without having to sell investments.
ETFs (Exchange-Traded Funds): Investment funds that track a market index and can be bought or sold like a stock
Financial Freedom: Having enough money to live comfortably without depending on a regular salary.
Financial Health: The overall state of your finances, including savings, debt, spending, and ability to meet financial goals.
Financial Literacy: The knowledge and skills to manage money effectively, including budgeting, saving, investing, and understanding financial concepts.
Herd Behavior: When investors follow the actions of others, often causing market overreactions.
Inflation: The rate at which the general level of prices for goods and services rises, reducing purchasing power.
Interest Rate Risk: The possibility that changing interest rates will affect the value of investments, especially bonds.
Liquidity Risk: The risk that you cannot quickly sell an asset for cash without losing value.
Long-Term Investment: An investment held for many years to achieve growth and financial goals.
Market Psychology: How emotions and behaviors of investors influence market movements.
Market Risk: The chance that the overall market will decline, affecting most investments.
Mutual Fund: A collection of investments managed by professionals, often combining stocks and bonds.
Portfolio: The collection of all investments an individual owns.
Risk: The possibility of losing money or having investment returns lower than expected.
Risk Management: Identifying, understanding, and minimizing investment risks while pursuing growth.
Risk Tolerance: The level of risk an investor is comfortable taking based on goals, age, and personality.
Sector: A specific part of the economy, like technology, healthcare, or energy.
Stocks (Equities): Shares representing ownership in a company, which can grow in value and pay dividends.
Stop-Loss Order: An automatic instruction to sell an investment if it falls to a certain price, limiting losses.
Time Horizon: The expected length of time an investor plans to hold an investment before needing the money.
Volatility: The degree of variation in the price of an investment over time; higher volatility means more risk.
Wealth-Building: Growing money over time through saving, investing, and disciplined financial planning.