Most professions have their own terminology or lingo. Unfamiliar financial terms can be very intimidating or confusing. Here are a few translations you may find useful:
Equities - stocks.
Fixed Income - bonds, CD's.
Volatility - the inevitable, daily ups and downs of the markets. (not good or bad)
Standard deviation - risk. It graphically maps historical returns.
ROI - return on investment - how much your money has grown.
Mutual funds and Exchange traded funds (ETF) - pools of stocks or pools of bonds. Vehicles which give access to multiple stocks (or bonds) at one time
Correlation - Choosing investments that do well at different times by determining the relationship of one investment to another. A way to avoid putting all your eggs in one basket.
Cap (as in capitalization) - size.
Mid-cap or large-cap stock are terms that classify the size of a company.
A way to measure the size of a company by multiplying the number of outstanding shares by its share price.
Alternative investments - other than stocks, bonds or cash. May include precious metals, art, real estate, commodities (e.g. coffee, corn, soy beans, pork bellies).
Alphabet Soup:
ETF - exchange traded fund (grouping of stock or bonds)
IRA - individual retirement account (tax-deferred savings for retirement)
SEP - simplified employee plan (retirement plan for small business)
REIT - real estate investment trust (groupings of different types of real estate- e.g. shopping malls, office buildings, senior housing).
CD - certificate of deposit (issued by banks for a set time, a set interest rate and a set amount of money).
EFT- electronic funds transfer - a means of transferring money from one account to another.
Be proactive. Learn the language or ask for a translation. Be $ smart.
