Empowering Young Investors with Knowledge
Some Common terms that are good to know
Stock: A share of ownership in a company. When you buy a stock, you own a small part of that company.
Bond: A loan you give to a company or government, and in return, they pay you interest over time.
Dividend: A portion of a company’s profits paid to shareholders (people who own the company’s stock).
Mutual Fund: A pool of money from many investors that is used to buy a variety of stocks, bonds, or other assets.
ETF (Exchange-Traded Fund): Similar to a mutual fund, but it is traded on stock exchanges like a stock. It holds a collection of assets such as stocks or bonds.
Index Fund: A type of mutual fund or ETF that tries to match the performance of a specific market index, like the nifty 500 (a group of 500 large India companies).
Portfolio: A collection of all your investments, including stocks, bonds, mutual funds, etc.
Diversification: Spreading your investments across different types of assets (like stocks, bonds, real estate) to reduce risk.
Risk: The possibility that you could lose money on an investment.
Return: The profit you make from an investment, usually expressed as a percentage.
Compound Interest: Earning interest on both the money you invest and the interest it has already earned, leading to faster growth over time.
Capital Gain: The profit you make when you sell an investment for more than you paid for it.
Market: The place where stocks, bonds, and other assets are bought and sold, like the stock market.
Liquidity: How easily you can buy or sell an investment without affecting its price.
Asset: Anything of value that you can invest in, like stocks, bonds, or real estate.
Broker: A person or platform that helps you buy and sell investments.
ROE: the financial ratio that measures how well a company generates profits from its shareholders' equity (money invested from investors)