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.

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