assetnoun
AS-et
Anything owned that has financial value and can generate income or be sold. Assets put money in your pocket.
"A rental property is an asset — it generates income every month regardless of whether you work."
liabilitynoun
ly-uh-BIL-ih-tee
A financial obligation or debt that must be paid. Liabilities take money out of your pocket.
"A mortgage is a liability — it represents money you owe the bank, reducing your net worth."
equitynoun (uncountable)
EK-wih-tee
The value of ownership in a company or asset — what you truly own after debts are subtracted. Also used to mean stocks.
"She has $100,000 in equity in her home — the property value minus what she owes on the mortgage."
stocknoun
stok
A share of ownership in a company, traded on a stock exchange. Stockholders share in the company's profits and losses.
"She bought stock in Amazon when it listed in 1997 and held it for 20 years."
sharenoun
shair
A single unit of ownership in a company. Owning shares makes you a shareholder.
"He owns 500 shares in Apple, worth approximately $90,000 at current prices."
bondnoun
bond
A fixed-income investment — a loan you make to a government or company, which pays regular interest and returns your principal at maturity.
"Government bonds are considered low-risk — the likelihood of a government defaulting is very low."
dividendnoun
DIV-ih-dend
A portion of a company's profits distributed to shareholders on a regular basis — typically quarterly.
"She receives $1,200 per quarter in dividends from her stock portfolio — passive income from her investments."
portfolionoun
port-FOH-lee-oh
A collection of financial investments — stocks, bonds, property, cash — held by an individual or institution.
"A well-diversified portfolio spreads risk across different asset types and geographies."
diversificationnoun (uncountable)
deh-VUR-sih-fih-KAY-shun
Spreading investments across different assets, sectors, and geographies to reduce the impact of any single loss.
"Diversification is the only 'free lunch' in investing — it reduces risk without necessarily reducing returns."
risk tolerancenoun phrase
risk TOL-er-uns
The degree of investment risk an investor is willing and financially able to accept — influenced by age, income, and financial goals.
"A young investor with a long time horizon can afford higher risk tolerance than someone nearing retirement."
return on investmentnoun phrase
reh-TURN on in-VEST-ment
The profit made on an investment relative to its cost, expressed as a percentage. Abbreviated ROI.
"The property delivered a 12% annual return on investment over ten years."
capital gainsnoun phrase
KAP-ih-tul gaynz
Profit made from selling an asset for more than its purchase price. Usually taxed differently from regular income.
"She realized $40,000 in capital gains when she sold her shares after three years."
passive incomenoun phrase
PAS-iv IN-kum
Income earned with minimal ongoing effort — from assets such as dividends, rental income, royalties, or interest.
"His goal is to build enough passive income to cover his living expenses without working a job."
hedge fundnoun
hej fund
A loosely regulated investment fund using complex and aggressive strategies to generate high returns — typically available only to wealthy or institutional investors.
"Hedge funds can short-sell, use leverage, and trade derivatives — strategies unavailable to ordinary mutual funds."
index fundnoun
IN-deks fund
A fund that tracks the performance of a market index — such as the S&P 500 — offering broad diversification at very low cost.
"Warren Buffett has recommended low-cost index funds for most ordinary investors."
compound growthnoun phrase
KOM-pound grohth
Growth where returns are reinvested to generate further returns — creating exponential acceleration over time. Called the "eighth wonder of the world" by Einstein.
"Compound growth turns $10,000 invested at 7% annually into $76,000 in 30 years without adding a cent."
net worthnoun phrase
net wurth
The total value of everything you own minus everything you owe — the most comprehensive measure of personal financial position.
"Calculating your net worth — assets minus liabilities — gives a clear picture of where you stand financially."
liquiditynoun (uncountable)
lih-KWID-ih-tee
How quickly and easily an asset can be converted to cash without a significant loss in value.
"Stocks have high liquidity — they can be sold in seconds. Real estate has low liquidity — it can take months to sell."
ETFabbreviation
ee-tee-ef
Exchange-Traded Fund — a fund holding a collection of assets that is traded on a stock exchange like a single stock. Combines the diversification of a fund with the flexibility of a stock.
"ETFs have democratized investing — you can own a piece of every company in the S&P 500 for a few dollars."
mutual fundnoun
MYOO-choo-ul fund
An investment vehicle that pools money from many investors and is professionally managed — investors buy units rather than individual stocks.
"She invested her savings in a mutual fund managed by a team of professional analysts."
yieldnoun
yeeld
The income generated by an investment expressed as a percentage of its current price — dividends for stocks, interest for bonds.
"The bond yields 4.5% annually — better than most savings accounts in the current environment."
rebalancingnoun
ree-BAL-un-sing
Periodically adjusting a portfolio back to its target allocation after market movements have shifted the proportions.
"Annual rebalancing ensures that strong performers don't make your portfolio riskier than you intended."
volatilitynoun (uncountable)
vol-uh-TIL-ih-tee
The degree to which an asset's price fluctuates over time. High volatility means large, unpredictable price swings.
"Cryptocurrency has very high volatility — its price can move 20% in a single day."
bull marketnoun phrase
bul MAR-ket
A sustained period of rising asset prices — typically defined as a rise of 20% or more from recent lows. Reflects optimism and economic confidence.
"We are in a bull market — the index has risen 35% from its October lows."
bear marketnoun phrase
bair MAR-ket
A sustained period of falling asset prices — typically defined as a fall of 20% or more from recent highs. Reflects pessimism and economic fear.
"A bear market is challenging for investors — but creates buying opportunities for those who are patient."
market capitalizationnoun phrase
MAR-ket kap-ih-tul-ih-ZAY-shun
The total market value of a company's outstanding shares — share price multiplied by number of shares. A measure of company size. Often shortened to "market cap."
"Apple's market capitalization exceeded $3 trillion, making it the most valuable company ever listed."