Investing.
Stocks, funds, bonds, and the mechanics of putting money to work. Clear definitions for the words behind your brokerage account and the market headlines.
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12b-1 Fee
A 12b-1 fee is a yearly charge some mutual funds take out of your money to cover marketing and distribution costs.
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Accrued interest
Accrued interest is the interest a bond has earned since its last payment; a buyer pays it to the seller when a bond changes hands between payments.
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Agency bond
An agency bond is debt issued by a government-sponsored enterprise or federal agency, offering slightly higher yield than Treasuries with very high safety.
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Bond ETF
A bond ETF is a fund that holds many bonds and trades on an exchange like a stock, giving easy, diversified access to fixed income.
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Brokerage account
A regular taxable investment account where you can buy and sell stocks, bonds, ETFs, and mutual funds.
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Business development company (BDC)
A BDC is a company that lends to and invests in small and mid-size private businesses, and it trades like a stock, often paying a high dividend.
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Closed-end fund (CEF)
A closed-end fund issues a fixed number of shares that trade on an exchange, often at a price above or below the value of its holdings.
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Commodity ETF
A commodity ETF gives exposure to raw materials like oil, gold, or grain, often by holding futures contracts rather than the physical goods.
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Stock
A small slice of ownership in a company that trades on a public market.
Index fund
A fund that doesn't try to beat the market.
ETF (Exchange-Traded Fund)
A basket of investments (usually hundreds or thousands) that you can buy as a single…
Diversification
Spreading your money across many investments so no single one can wreck the whole thing.
Bond
A loan you make to a government or company in exchange for interest and your money back…
All investing terms, A to Z
# 2 terms
12b-1 Fee★
A 12b-1 fee is a yearly charge some mutual funds take out of your money to cover marketing and distribution costs.
52-week high / low
The 52-week high and low are the highest and lowest prices a stock has traded at over the past year, a common quick gauge of its range.
A 13 terms
Accredited investor
An SEC designation for investors who meet income, net worth, or credential thresholds. Required for many private investments.
Accrued interest★
Accrued interest is the interest a bond has earned since its last payment; a buyer pays it to the seller when a bond changes hands between payments.
Adjusted earnings
Adjusted earnings are profit after a company removes items it calls one-time or unusual, so the number is chosen by the company, not by accounting rules.
After-hours / pre-market trading
After-hours and pre-market trading happen outside normal exchange hours, with thinner volume, wider spreads, and bigger price swings.
Agency bond★
An agency bond is debt issued by a government-sponsored enterprise or federal agency, offering slightly higher yield than Treasuries with very high safety.
Alpha
Alpha is the extra return an investment earns above (or below) what its benchmark index returned, after accounting for risk.
Alternative asset
An alternative asset is an investment outside the usual mix of stocks, bonds, and cash, such as real estate, commodities, art, or private equity.
American depositary receipt (ADR)
An ADR is a certificate traded on a U.S. exchange that represents shares of a foreign company, letting Americans buy foreign stocks in dollars.
Annual return
Annual return is how much an investment gained or lost over one year, written as a percentage of what you started with.
Ask
The ask is the lowest price a seller is currently willing to accept for a security, the other side of every quoted price.
Asset
An asset is anything you own that has value and could be turned into cash, like savings, stocks, a car, or a house.
Asset allocation
The mix of stocks, bonds, and cash you hold, often one of the biggest long-term decisions in investing.
AUM
Assets Under Management. The total dollars a fund, advisor, or firm invests on behalf of clients.
B 13 terms
Bear market
When a stock market index falls 20% or more from its recent peak.
Beta
How much a stock moves relative to the broad market. Beta of 1 moves with the market; 1.5 swings 1.5 times as much.
Bid
The bid is the highest price a buyer is currently willing to pay for a security, one side of every quoted price.
Bid-ask spread
The bid is the highest price a buyer will pay. The ask is the lowest a seller will accept. Their gap is the spread.
Bitcoin
Bitcoin is the first and largest cryptocurrency, a digital money that runs on a public network with no bank or government in the middle.
Blockchain
A shared digital ledger that records transactions across many computers at once, so no single party controls it and past entries are hard to change.
Bond
A loan you make to a government or company in exchange for interest and your money back at the end.
Bond Duration
Bond duration measures how much a bond's price moves when interest rates change, expressed as a number of years.
Bond ETF★
A bond ETF is a fund that holds many bonds and trades on an exchange like a stock, giving easy, diversified access to fixed income.
Bond Ladder
A bond ladder is a set of bonds that mature in different years, so some of your money frees up at regular intervals.
Brokerage account★
A regular taxable investment account where you can buy and sell stocks, bonds, ETFs, and mutual funds.
Bull market
A long stretch of rising stock prices, the opposite of a bear market.
Business development company (BDC)★
A BDC is a company that lends to and invests in small and mid-size private businesses, and it trades like a stock, often paying a high dividend.
C 22 terms
Call option
A contract giving the buyer the right to buy 100 shares of a stock at a set strike price by a set expiration date.
Callable Bond
A callable bond lets the issuer pay you back early, usually when interest rates drop and they can borrow more cheaply.
Capital
Capital is the money or wealth you have available to put to work, whether to invest, start a business, or buy something that earns more later.
Cash account vs margin account
A cash account lets you trade only with your own money; a margin account lets you borrow from the broker to buy more, adding risk.
Closed-end fund (CEF)★
A closed-end fund issues a fixed number of shares that trade on an exchange, often at a price above or below the value of its holdings.
Collectible
A collectible is a physical item like art, wine, or trading cards bought as an investment, hoping it rises in value over time.
Commodity
A raw material or basic good (gold, oil, wheat, copper) often traded via ETFs or futures contracts.
Commodity ETF★
A commodity ETF gives exposure to raw materials like oil, gold, or grain, often by holding futures contracts rather than the physical goods.
Convertible bond★
A convertible bond is a corporate bond that can be exchanged for a set number of the company's shares, blending bond income with stock upside.
Convertible preferred stock★
Convertible preferred stock is a preferred share that pays a fixed dividend and can be converted into a set number of common shares.
Corporate spin-off
A spin-off is when a company splits off part of itself into a new, independent company and gives shareholders stock in it.
Correction
A drop of 10% or more from a recent market high. Less severe than a bear market's 20% decline.
Correlation
Correlation measures how closely two investments move together, on a scale from +1 (in lockstep) to -1 (opposite directions).
Coupon
A coupon is the fixed interest payment a bond makes to its holder, usually stated as an annual percentage of the bond's face value.
Coupon Rate
The coupon rate is the fixed annual interest a bond pays, stated as a percentage of its original face value.
Credit Ratings
Credit ratings are grades from rating agencies that estimate how likely a borrower is to pay back a bond on time.
Crypto exchange★
A crypto exchange is a platform where people buy, sell, and trade cryptocurrencies, usually charging a fee on each transaction.
Crypto mining
Crypto mining is the process where computers compete to add new transactions to a blockchain and are rewarded with newly created coins.
Cryptocurrency
A digital asset whose ownership is tracked on a blockchain, a public distributed database secured by cryptography.
Cryptocurrency wallet
A cryptocurrency wallet is a tool that stores the keys needed to access and move your crypto; it holds the keys, not the coins themselves.
Currency ETF
A currency ETF tracks the value of a foreign currency or a basket of them against the dollar, letting you invest in exchange-rate moves.
Custodial vs non-custodial wallet
A custodial wallet holds your keys for you, like an exchange account; a non-custodial wallet puts the keys, and the responsibility, in your hands.
D 8 terms
DeFi
DeFi, or decentralized finance, is financial services like lending and trading run by code on a blockchain instead of by banks or brokers.
Direct Listing
A direct listing is when a company starts trading its existing shares on an exchange without raising new money or hiring banks to sell new stock.
Diversification
Spreading your money across many investments so no single one can wreck the whole thing.
Dividend★
A cash payment a company sends to shareholders, usually quarterly.
Dividend Payout Ratio
The dividend payout ratio is the share of a company's profit it pays out as dividends instead of keeping to reinvest.
Dow Jones (DJIA)
An index of 30 large, established U.S. companies. Older and narrower than the S&P 500 but widely quoted.
Drawdown
The peak-to-trough decline of an investment, expressed as a percentage from its all-time high.
DRIP★
A DRIP (dividend reinvestment plan) automatically uses your dividends to buy more shares instead of paying you cash.
E 10 terms
Earnings Per Share
Earnings per share, or EPS, is a company's profit divided by its number of shares, a common measure of how much it earns for each share you own.
EPS
Earnings per share. A company's net profit divided by shares outstanding. The denominator of the P/E ratio.
Equity
Equity is the value of what you own outright: your ownership stake in a company through stock, or the share of an asset that is truly yours after debts.
Equity (investing)
Equity is the ownership stake you hold in something, like shares of a company or the part of your home you actually own.
ESPP (Employee Stock Purchase Plan)
A workplace plan that lets you buy your company's stock at a discount, usually through payroll deductions.
ETF (Exchange-Traded Fund)
A basket of investments (usually hundreds or thousands) that you can buy as a single share on the stock market.
Ethereum
Ethereum is a blockchain network that runs programs called smart contracts, with its own cryptocurrency, Ether, used to pay for activity on it.
Ex-Dividend Date
The ex-dividend date is the cutoff: buy a stock on or after it and you do not get the upcoming dividend, the seller does.
Exchange-traded note (ETN)
An ETN is a debt note from a bank that tracks an index and trades like an ETF, but it carries the risk that the issuing bank fails.
Expense ratio★
The annual percentage a fund keeps to run itself, paid silently out of your returns.
F 9 terms
Fee drag★
Fee drag is the cumulative bite that investment fees take out of your returns as they compound against you over years.
Fiduciary★
A legal standard requiring an advisor to act in the client's best interest. Not all advisors are fiduciaries.
FINRA
The Financial Industry Regulatory Authority. A self-regulator overseeing U.S. brokerage firms and their reps.
Floating-rate note★
A floating-rate note is a bond whose interest resets periodically with a benchmark rate, so its payments rise and fall as rates change.
Fractional Shares
Fractional shares let you buy a portion of one share, so you can invest a fixed dollar amount even in a high-priced stock.
Free cash flow
The cash a company has left after paying for operations and the buildings and equipment it buys. The money actually available to its owners.
Fund of funds★
A fund of funds invests in other funds rather than directly in stocks or bonds, adding a second layer of fees on top of the underlying ones.
Fund Turnover Ratio
A fund's turnover ratio shows how much of its holdings it bought and sold in a year, hinting at trading costs and possible tax bills.
Futures
A futures contract is an agreement to buy or sell something at a set price on a future date, used to hedge or to speculate.
G 7 terms
Gas fees★
Gas fees are the payments you make to a blockchain network to process your transaction, rising and falling with how busy the network is.
Gold
Gold is a precious metal held as an investment, valued as a store of wealth and a hedge, that pays no interest or dividends.
Good-faith violation / free-riding
A good-faith violation happens in a cash account when you sell a security you bought with funds that had not yet settled, breaking settlement rules.
Good-Til-Canceled Order
A good-til-canceled order stays active until it fills or you cancel it, instead of expiring at the end of the trading day.
Growth stock
A stock priced for high expected future earnings growth. Usually pays no dividend; profits are reinvested.
Growth vs Value Investing
Growth investing buys companies expected to expand fast, while value investing buys companies that look cheap relative to what they earn.
Guidance
Guidance is a company's own forecast of what it expects to earn or sell in future periods, given to investors alongside its results.
H 3 terms
Hedge fund
A pooled investment fund using complex strategies (shorting, borrowed money, derivatives), open mostly to accredited and institutional investors.
High-Yield Bonds
High-yield bonds, also called junk bonds, pay higher interest because the issuer has a higher risk of not paying you back.
Hot wallet vs cold wallet
A hot wallet is connected to the internet for easy access; a cold wallet stays offline for stronger protection against theft.
I 4 terms
Index fund
A fund that doesn't try to beat the market. It just owns the whole market and matches it.
International Fund
An international fund is a mutual fund or ETF that invests in companies outside your home country, adding global diversification to a portfolio.
Inverse ETF★
An inverse ETF aims to move opposite to an index each day, rising when the index falls, using derivatives, and it also resets daily.
IPO
The first time a private company sells its shares on a public stock exchange, so anyone can buy them.
L 10 terms
Level 2 quotes
Level 2 quotes show the full order book, the competing buy and sell orders at different prices, beyond the single best bid and ask.
Leverage
Using borrowed money to fund something. It raises how much you can control and raises what you can lose, in the same proportion.
Leveraged ETF★
A leveraged ETF uses borrowing and derivatives to aim for a multiple, like 2x or 3x, of an index's daily return, and it resets every day.
Liability
A liability is money you owe to someone else, like a loan, a credit card balance, or an unpaid bill.
Limit Order
A limit order buys or sells a stock only at your set price or better, giving you price control but no guarantee it fills.
Liquidity
How quickly an asset can be turned into cash without losing value.
Load vs No-Load Funds★
A load fund charges a sales commission when you buy or sell, while a no-load fund charges no such commission, so more of your money stays invested.
Lock-Up Period
A lock-up period is a set window after a company goes public when insiders are barred from selling their shares.
Lump sum
A lump sum is a single large amount of money paid or invested all at once, rather than spread out over time.
Lump-sum vs dollar-cost-averaging★
Two ways to invest a pile of cash: all at once as a lump sum, or spread out over time through dollar-cost averaging.
M 12 terms
Margin
Borrowing from your broker to buy more securities than your cash supports. Amplifies gains and losses.
Margin Call
A margin call is a demand from your broker to add money or sell holdings when the value in your margin account drops below the required minimum.
Market cap
Market capitalization. A company's stock price times its total shares outstanding. The market's estimate of total equity value.
Market Index
A market index is a single number that tracks the combined value of a chosen group of stocks or bonds, used as a scorecard for a part of the market.
Market Order
A market order buys or sells a stock right away at the best available price, prioritizing speed over an exact price.
Market-cap sizes (large, mid, small)
Stocks grouped by total company value: large-cap above $10 billion, mid-cap $2 to $10 billion, small-cap below $2 billion.
Maturity
The date a bond, CD, or other fixed-term investment ends and you get your original money back.
Maximum Drawdown
Maximum drawdown is the biggest drop from a peak to a low point an investment took before climbing back, measured as a percentage.
Mortgage-backed security (MBS)
An investment built from a bundle of home loans. Investors buy it and collect the homeowners' mortgage payments as their return.
Moving average
A moving average smooths a price into an average over a recent window of days, a common tool for spotting a stock's trend.
Municipal Bonds
Municipal bonds are loans you make to a state or local government, and the interest is often free from federal income tax.
Mutual fund
A pool of money from many investors used to buy a basket of stocks or bonds, managed as one fund.
N 5 terms
Nasdaq Composite
An index of every company listed on the Nasdaq exchange. Heavily weighted toward technology.
NAV (Net Asset Value)
NAV, or net asset value, is the per-share value of a fund: its total holdings minus what it owes, divided by the number of shares.
Net Asset Value
Net asset value (NAV) is the per-share price of a fund, found by taking everything it owns minus what it owes, divided by the shares outstanding.
NFT
An NFT, or non-fungible token, is a blockchain record that marks one specific digital item as unique and shows who owns it.
NYSE
The NYSE, or New York Stock Exchange, is the largest US stock exchange, a marketplace where shares of thousands of public companies are bought and sold.
O 5 terms
Odd lot vs round lot
A round lot is a standard trading block of 100 shares; an odd lot is any amount that is not a multiple of 100, like 7 or 143 shares.
Open-end fund
An open-end fund creates and redeems shares on demand at its net asset value, the structure behind most mutual funds and ETFs.
Operating margin
Operating margin is the share of each revenue dollar a company keeps as profit from its core business, before interest and taxes.
Options
Contracts giving the right (not the obligation) to buy or sell something at a set price by a set date.
Order types (market / limit)
A market order trades at whatever price is available now. A limit order trades only at a specified price or better.
P 16 terms
P/E ratio
Price-to-earnings ratio. A stock's price divided by its annual earnings per share. A rough gauge of how expensive the stock is.
Par value / face value★
Par value, or face value, is the amount a bond promises to repay at maturity and the base its interest is calculated on, usually 1,000 dollars.
Passive investing
Passive investing means buying broad, low-cost funds that track a market index and holding them, instead of trying to pick winners or time the market.
Payment Date
The payment date is the day a declared dividend actually lands in your account as cash or reinvested shares.
Ponzi scheme
A Ponzi scheme is a fraud that pays old investors with money from new investors instead of real profits, until it runs out of new money and collapses.
Portfolio margin★
Portfolio margin is an advanced method that sets borrowing limits based on the overall risk of a portfolio, allowing more leverage than standard rules.
Precious metals investing★
Precious metals investing means putting money into gold, silver, or platinum, through physical metal, funds, or mining stocks, mainly as a diversifier.
Price Return vs Total Return★
Price return counts only the change in an investment's price, while total return also adds the dividends or interest it paid you.
Price-to-earnings ratio (P/E)
A stock's price divided by its earnings per share. It shows how much investors are paying for each dollar of a company's profit.
Primary vs Secondary Market
The primary market is where new securities are first sold by the issuer; the secondary market is where investors trade them afterward.
Private equity
Funds that buy whole companies (often with debt financing), try to improve them, then sell years later.
Private key
A private key is the secret code that proves you own crypto and lets you spend it; anyone who has it controls the funds.
Proof of work vs proof of stake
Two ways a blockchain agrees on its records: proof of work uses computing power and energy; proof of stake uses coins put up as collateral.
Prospectus
A prospectus is the legal document a fund or company must give you that spells out its goals, costs, risks, and how it invests your money.
Put option
A contract giving the buyer the right to sell 100 shares of a stock at a set strike price by a set expiration date.
Pyramid scheme
A pyramid scheme is a fraud where you earn mainly by recruiting others to pay in, not by selling a real product, so it collapses when recruiting stops.
R 10 terms
Real Yield
Real yield is the return on an investment after subtracting inflation, showing how much your money actually grows in buying power.
Rebalancing
Periodically resetting your investments back to your target mix after the market moves them around.
Record Date
The record date is the day a company checks its shareholder list to decide who qualifies to receive the next dividend.
REIT
Real Estate Investment Trust. A company owning income-producing real estate that distributes most of its income to shareholders.
Relative strength index (RSI)
RSI is a momentum gauge from 0 to 100 that suggests whether a stock may be overbought, above 70, or oversold, below 30.
Rights offering
A rights offering gives existing shareholders the chance to buy new shares, usually at a discount, in proportion to what they already own.
Risk
Risk is the chance that an investment's actual return turns out different from what you expected, including the chance of losing money.
Robo-advisor
An online service that builds and rebalances a diversified ETF portfolio for you, usually for a low percentage fee.
RSU (restricted stock unit)
Restricted stock units: company shares your employer promises you, delivered on a vesting schedule, and taxed as income when they arrive.
Russell 2000
The Russell 2000 is a market index that tracks about 2,000 small US companies, widely used as the scorecard for small-cap stocks.
S 23 terms
S&P 500★
An index of about 500 of the largest U.S. publicly traded companies, weighted by market cap. The default benchmark for U.S. stocks.
SEC
The U.S. Securities and Exchange Commission. The federal regulator over public markets, brokerages, and investment advisers.
Sector
A sector is a group of companies that do similar kinds of business, like technology, healthcare, or energy.
Sector / thematic ETF
A sector or thematic ETF holds stocks concentrated in one industry or trend, like technology or clean energy, rather than the whole market.
Securities lending★
Securities lending is when your broker lends out shares you own, often to short sellers, sometimes sharing a small fee with you.
Seed phrase
A seed phrase is a list of simple words that backs up a crypto wallet; anyone who has it can restore the wallet and take the funds.
Series EE Savings Bonds★
Series EE savings bonds are low-risk U.S. Treasury bonds that the government guarantees will double in value if held for 20 years.
Settlement
Settlement is the moment a trade actually finalizes: cash and the security officially change hands and the deal is locked in.
Share
A share is one unit of ownership in a company, so owning shares means you own a small piece of that business.
Share classes
Different versions of the same fund or stock, with different fees or voting rights attached to each.
Shares outstanding
Shares outstanding is the total number of a company's shares held by all investors; the freely tradeable portion of it is called the float.
Sharpe ratio
A measure of return per unit of risk. (Portfolio return minus risk-free rate) divided by standard deviation.
Short selling
Borrowing a stock to sell it, hoping to buy it back later at a lower price. Losses are theoretically unlimited.
SPAC
A SPAC is a shell company that raises money in a stock offering with no business of its own, planning to later merge with a real company to take it public.
Specific Lot Identification
Specific lot identification lets you choose exactly which shares to sell, so you can control the taxable gain or loss on the sale.
Stablecoin
A cryptocurrency designed to track the value of an external asset, usually the U.S. dollar.
Standard deviation
A statistical measure of how widely returns vary around the average. The textbook proxy for volatility.
Stock
A small slice of ownership in a company that trades on a public market.
Stock split
A stock split divides each existing share into more shares at a lower price, without changing the total value of your holding.
Stock warrant
A stock warrant is a company-issued right to buy its shares at a set price before an expiration date, often years away.
Stop-Limit Order
A stop-limit order triggers at one price and then only fills at your limit price or better, adding price control to a stop.
Stop-Loss Order
A stop-loss order automatically sells a stock once it falls to a price you set, aiming to cap how much you lose.
Support and resistance
Support is a price level where a stock has tended to stop falling; resistance is a level where it has tended to stop rising.
T 10 terms
Tax-Loss Harvesting
Tax-loss harvesting is selling an investment that has dropped in value to lock in a loss you can use to lower your tax bill.
Taxable account
A regular brokerage account with no special tax treatment, where you owe tax on dividends, interest, and gains as you receive or realize them.
Tender offer
A tender offer is a public bid to buy shareholders' stock at a set price, usually above market, often to take over or buy back a company.
Ticker Symbol
A ticker symbol is the short string of letters that identifies a stock or fund on an exchange, like AAPL for Apple.
Total bond market index fund
A total bond market index fund holds a broad mix of U.S. bonds, government, corporate, and mortgage, for diversified fixed income in one fund.
Total Return★
Total return is your full gain from an investment: the change in price plus any dividends or interest, not just the price move.
Total stock market index fund
A total stock market index fund holds almost every publicly traded U.S. stock, giving broad, one-fund exposure to the whole market.
Trading Day
A trading day is a day when the stock market is open for buying and selling, normally a weekday that is not a market holiday.
Trailing stop order★
A trailing stop is a sell order that follows a rising price by a set amount or percent and triggers a sale if the price falls back by that much.
Treasury
Debt securities issued by the US federal government, treated as among the safest investments because they are backed by its full faith and credit.
V 3 terms
Value stock
A stock trading at a low price relative to its earnings, book value, or cash flow. Often pays dividends.
Venture capital
Funds that invest in early-stage startups, expecting most to fail and a few to become very valuable.
Volatility
How much an investment's price moves around. Often measured by standard deviation of returns.
Y 4 terms
Yield
The annual income from an investment as a percentage of its price. Yield rises when price falls.
Yield to call★
Yield to call is the return you would earn on a callable bond if the issuer redeems it early at the first call date, rather than at maturity.
Yield to Maturity
Yield to maturity is the total annual return you earn on a bond if you buy it now and hold it until it matures.
Yield to worst★
Yield to worst is the lowest yield a bond could produce across all its possible early-redemption and maturity scenarios, a conservative estimate.