Defined as investment by companies and other bodies on long-term physical assets, like buildings, plant and machinery, which are to be used for productive. ASSET CLASS – An investment category; i.e. equities (stocks), or investor psychology; these terms are most often used to refer to the stock market, but. terms dictionary with over finance and investment definitions. Subscribe to 'term of the day' and learn a new financial term every day. BETTING ZONE RACING POST

Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. We believe everyone should be able to make financial decisions with confidence.

So how do we make money? Our partners compensate us. This may influence which products we review and write about and where those products appear on the site , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners. NerdWallet Apr 18, Many or all of the products featured here are from our partners who compensate us.

This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

In simple terms, what is investing? Investing is putting your money into assets, such as stocks or bonds, with the expectation that your money will grow. Personal finance is full of concepts that can intimidate newcomers. A lot of complex-sounding financial principles are actually pretty simple, and understanding how they apply to your finances can pay huge dividends.

Ready to learn more? We'll define other financial terms in a straightforward way. Investing definitions everyone should know Active investing: Active investing is a hands-on approach to investing. Active investors frequently buy and sell stocks or other investments. Active stock traders might look at trading volume, price trends and past stock market data to help anticipate where market prices might go. Alternative investments: Any assets that aren't stocks, bonds or cash.

Bitcoin , real estate, rare art and other collectibles are all examples of alternative assets. Asset: Something you can invest in, such as stocks, bonds and cash. Broadly speaking, an asset can be anything that has economic value, including a home or car.

Asset allocation: This investing strategy balances the assets in your investment portfolio based on your age, goals, risk tolerance and other considerations. Bonds: One of the three main asset classes frequently used in investing. A bond is a loan to a company or government that pays investors a fixed rate of return over time. Broker: A broker is a person or firm licensed to buy and sell stocks and other securities through stock market exchanges.

In the past, the only way for people to invest directly in stocks was to hire stockbrokers to place trades on their behalf. Today, most investors place their trades themselves, through a brokerage account at an online stockbroker. Are you feeling lost? Read our explainers on brokerage accounts and buying stocks. CFP: A CFP is a certified financial planner , a type of financial advisor who possesses one of the most rigorous certifications for financial planning knowledge and adheres to a strict ethical standard.

They are held to a fiduciary standard, meaning they are obligated to act in their client's best interest. They can help their clients create and maintain a financial plan. Capital gains: Profits from the sale of certain assets or investments — shares of stock, a piece of land, a business, for example. Capital gains are generally are considered taxable income. Compound interest: The interest you earn on both your original deposit and on the interest that original deposit earns.

Experiment with this compound interest calculator to see how it works. Commodities Commodities are raw materials or agricultural products, and they usually fall into one of four categories: metals, energy, livestock and meat, and agricultural products. Commodities are considered a risky investment since their value relies on supply and demand. In Canada, our metal commodities include gold and aluminum.

Our main meat export is beef, and our main agricultural commodities are meat and canola. Common stock This is the type of stock issued to the majority of shareholders in a company. Common shareholders have voting rights, but, should the company need to liquidate its assets, creditors, bondholders, and preferred shareholders will be paid before any common stocks are paid out. Diversification This is a technique investors use to reduce the risk of losing money by spreading investments across a variety of industries and assets.

Dividend This is another way investors make money from their investments. The first is capital gains, which are profits from the sale of an investment. Dividends, on the other hand, are payments that corporations make to current shareholders. So, while they still own their stocks. This ratio helps investors understand how much money a company makes per share, so they can see how valuable each share—and, by extension, the company—is.

These funds invest in companies that prioritize sustainability, ethical business practices, and good corporate governance. Equity The term equity is used in finance in three different ways. This number can be positive or negative depending on how much profit a company generates and how much money it owes.

But like with stocks, investors can buy a share of a basket. Futures This is a financial contract that requires a buyer to purchase a specific asset and a seller to provide that asset at a specific time in the future. The product could be anything from oil to gold to U. Hedge fund This is a financial partnership between a fund manager the general partner and investors limited partners who pool their funds, then use different, often aggressive strategies to achieve higher returns.

Index fund An index fund is a type of mutual fund or ETF. The idea behind index funds is that in the long run, the market will generate greater returns than any one investment. This allows a company to raise capital through investment from the public. Read more about how to invest as a teenager in Canada. Management expense ratio MER Sometimes called an expense ratio, the MER calculation determines the cost of operating a fund for example, administrative expenses.

Margin account This is a type of account that allows you to borrow money to invest. When an investor purchases a stock in a margin account, they pay part of the purchase price and borrow the rest from a broker. If your investment earns interest or dividends, that can be applied to the loan. You can calculate it by multiplying the total number of outstanding shares i.

Market order Market orders are instructions from an investor to their broker to buy or sell a security immediately. More on what securities are below! Market timing This is an investment strategy that involves trying to predict the best times to buy or sell stocks in order to maximize profit. It can be difficult for individual investors to time the market effectively, and even institutions often depend on trading software to help. Mutual fund A mutual fund is a professionally managed fund that pools money from multiple investors to invest in a variety of securities, including stocks and bonds.

They usually require a relatively small minimum investment and, since they invest in multiple securities, are considered less risky. Preferred shareholders receive dividend payments before common shareholders—usually monthly or quarterly—but generally do not have voting rights. The Big Five banks in Canada usually have the same prime rate. At the time of publishing this article, the prime rate in Canada is 2.

The funds can be put toward tuition, books, computers, transportation, or housing. Learn more about how income tax works in Canada. There are different types of RRSPs—individual, spousal, and locked-in. Like RESPs, this is a tax-deferred investment. There are three broad types of securities: equity, which gives holders ownership rights; debts, which entitle holders to interest payments; and hybrids, which combine the two.

Short selling When investors short-sell stock, it means they think it will decrease in value.

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