Unscrambling Money Talk

Feeling lost in the language of finance? Don't worry, you're not alone! This glossary is your guide to navigating the financial world with confidence.

Asset

An asset is something that has monetary value. This includes your personal possessions like cars, house, jewellery etc. This also includes your savings, investments, cash, artwork, checking etc.

Asset Allocation

An asset allocation is the way of dividing your money among different types of investments such as stocks, bonds, cash, real estate etc. Your asset allocation is determined by your age, time horizon and your willingness to take risk.

Asset Class

An asset class is a collection or way to group investments that have similar characteristics. They respond to risks, returns and market fluctuations similarly. Stocks, bonds, real estate, cash are some of the examples of asset classes.

Bond

A bond is a type of investment where you lend money to a company or government for a specific period of time. In exchange you receive interest payments and the principal amount back at a specified date. They provide steady stream of income to the investor.interest payments and the principal amount back at a specified date. They provide steady stream of income to the investor.

Equity

It is also called as stock. When you buy a stock you own a piece of the company that issues it. This means that you will make money if the company does well and lose money if the company doesn't. The money that you make comes from an increase in share price or through dividend payments.

Dollar cost averaging(DCA)

Instead of putting all of your money at once, in DCA you invest a fixed amount of money in the stock or fund every month or every week, regardless of the price. Thus you buy more shares when the price is low and and less shares when the price is high. Thus you buy more shares when the price is low and and less shares when the price is high.

Capital Gain

An increase in the value of the investment. It is the profit that you receive when you sell the investment for more than what you paid for it.sell the investment for more than what you paid for it.

Capital Loss

A decrease or loss in the value of an investment. It is the loss that you incur when you sell the investment for less than what you paid for it.sell the investment for less than what you paid for it.

Diversification

In diversification you spread your money across different types of investments such as stocks, bonds, real estate etc. It helps to reduce risk - if the vale of one investment goes down the you have other investments that you can fall back on.

Appreciation

An increase in the value of an investment.

Depreciation

An decrease in the value of an investment.

Dividend

Dividend is the money that a company pays from its profit to its shareholders. Dividends can be issued in the form of cash, stock or any other form.