Investment simply means the process of putting or using money with a goal of expanding and earning money by various means of the strategy. Likes of purchasing of the stock, commodities property, corporate bond, government bond and Funds etc. 15 investment terms will walk you through about your investment planning before you invest.
This article is for the beginners those who are trying to understand the terminology and getting a basic understanding of the world of investing. It is very useful for college students and future investors. Most of us have heard about the legendary investor Warren Buffet and how he made his fortune. For your motivation, there are great investment companies and the owner. On the top of the list is Ray Dalio (Bridgewater Associates) portfolio of $130 billion funds. Second is James H Simon and Howard L Morgan of Renaissance Technologies portfolio of $110 billion funds. The third is James Man of the Man group portfolio of $62 billion in funds. There are heaps of billionaires who became rich just by investing money. Here is the small video on investing in stock for beginners
We have grabbed some 15 must investment terms that you need to know before investing
Capital
The fund invested in a company with a retaining portion of the company’s earning with various means of investing through open market or direct investment in the company on a long-term basis from the date of incorporation. You would have heard lately in news about the start-ups is looking to raise x amount of capital.
Equity
The valuation of the shares issued by a company representing the ownership in the company depending on the capital invested.
Liquidity
The definition of liquidity is the rate of which an asset can be sold or bought in the market place. Cash can be easily converted into the other asset. There are more digital currencies in the form of crypto floating nowadays in the market. This is another way of liquidity.
Stock
Investment in the company equating to the part of ownership in the company. We all have heard of the stock market. A platform that helps us invest in various company. By investing we become owners in the company equal to the value of our investment.
Share
A unit of ownership in an investment. A unit is defined by the value of the stock.
Market Price
A defined value of an asset. Usually, the price of the stock is the market price of the company. For example, the share value of the company is traded for an ‘x’ amount. If we take all shares of the company and multiply it by the total number of shares that will give us the market value of the company.
Total No. of shares X Value of share = Market Value of the company.
Annual Report
The yearly report produced by the Company, Corporation or Mutual fund including profits and revenue etc. It is a very detailed document that describes the financial structure of a particular company. If a company is trading in an open market place they are abiding by the law to produce an annual report for its investors.
Bear Market
A period of falling of the stock prices. It is commonly marked by the sharp drop of 20% and above. There could be various reason for the drop such as negativity about the business recession, growing unemployment. For example, we all have witnessed one recently due to the pandemic SARS COV2 also knows Covid-19. The Bull Market is opposite of Bear Market.
Bull Market
A Period of sharp gaining of stock prices, commonly because of positive news in the market. Winning new tenders or increase in revenue and profits more than expected. This is opposite of the bear market.
Dividend
A sum of money paid by the company to its shareholders from its profits. A common practice is the company pays out dividend annually. However, it varies depending on companies can do quarterly.
Inflation
When the price of goods and services increase and fall of purchasing value of money.
Recession
A period of a temporary reduction in the economic activity resulting in the drop of GDP of the country. The common signs are unemployment and a decline in business.
Portfolio
The Collection of investment owned by a person or organization.
Valuation
The measure of the worth of the company.
Bond
It is a fixed income given as a loan by an investor (Individual or Corporation) to the borrower (Corporation or Government). The Percentage of interest can vary depending on the issuer of the bond. For example, generally used to borrow money to fund the various project deemed necessary by the governments.
If you follow these above 15 investment terms before investing, the chances of losing money will be less. Also, you might be thinking that how can I invest when I don’t have money. There are many reasons you can ask yourself how to save money. We have one article for you that you can start saving some money from your personal expenses
More You Learn, More You Earn.
