47 Terms You Need To Understand By 30

47 Terms Every Investor Needs To Understand By Age 30

(If you want to have a shot at being a millionaire by 40):

1. Asset allocation - the percentage of each asset you own

2. Diversification - when you own different types of assets

3. Mutual fund - a pool of money from investors to invest in groups of assets

4. Index fund - a type of mutual fund that tracks a list of stocks

5. ETF - a fund that trades like a stock

6. Annualized returns - overall returns averaged to year over year returns

7. Dividend - distributed profits to shareholders

8. Stock option - the right, but not obligation, to buy/sell a stock at a price and date that’s agreed upon

9. Market cap - total value of a public company

10. Large cap - company valued at least $10B

11. Mid cap - company valued between $3B - $10B

12. Small cap - company valued between $250M - $3B

13. Stock option - the right, but not obligation, to buy/sell a stock at a price and date that’s agreed upon

14. Basis point - a unit of measurement. One-hundredth of a percent

15. Blue chip - a well established company that ranks in the top of its sector

16. Penny stock - a stock worth $5 / share or less

17. Stop loss order - a trigger to sell a stock when it reaches a certain price

18. Ask - how much sellers want for a stock

19. Bid - how much buyers are willing to pay for a stock

20. Balance sheet - shows assets and liabilities

21. Income statement - shows revenue and expenses

22. Cash flow statement - tracks how a business uses cash

23. Bear market - a market decline of 20% or more

24. Recession - 2 consecutive quarters of declining GDP

25. Bull market - when the market goes up without falling 20%

26. Capital gain - when you sell an asset and profit

27. Capital loss - when you sell an asset and lose money

28. DCA - (dollar cost averaging) when you invest periodically with a fixed dollar amount

29. Equity - a stock/ownership of assets

30. Expense ratio - the fee associated with investment funds

31. Fixed income investments - fixed payments you receive from an investment

32. Bond - a loan to an company/government

33. Liquidity - how fast an asset can be bought/sold

34. Margin - a loan for investing

35. IPO - when a company can be bought/sold on an exchange

36. Stock split - when shares are split to create multiple shares

37. Earnings report - a businesses financial results from a specific period

38. Short selling - when you bet an investment will decline in value

39. Taxable account - investment account without tax advantage

40. Tax advantaged account - investment account that saves money on taxes

41. S&P 500 - top 500 companies in US

42. Alpha - a way to measure excess returns against an investment

43. Beta - measurement of volatility

44. Inflation - when stuff gets more expensive over time

45. Value investing: when you invest in undervalued companies

46. Growth investing: when you invest in companies with a high growth potential

47. Compound interest - when your money makes you more money

There you have it!

47 terms every investor should know by age 30.