An Easy Way To Learn Investment Terminology

by Pam on September 28, 2009

check out Investopedia.com's investment dictionaryIf you are working on developing your investment knowledge and are attempting to read financial articles, you will likely need help in learning all the investment terminology.  I find Investopedia.com’s dictionary extremely helpful in explaining investment jargon.

Not only does the site provide a definition, it also provides an explanation to further your understanding.

For example, when I looked up the word “bond”, this is what I found in the Investopedia.com dictionary:

What Does Bond Mean?

A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.

Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents..

Investopedia explains Bond

The indebted entity (issuer) issues a bond that states the interest rate(coupon) that will be paid and when the loaned funds (bond principal) are to be returned (maturity date). Interest on bonds is usually paid every six months (semi-annually). The main categories of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds, notes and bills, which are collectively referred to as simply “Treasuries”.

Two features of a bond – credit quality and duration – are the principal determinants of a bond’s interest rate. Bond maturities range from a 90-day Treasury bill to a 30-year government bond. Corporate and municipals are typically in the three to 10-year range.”

So, as you can see, this site can be extremely helpful for anyone who is unfamiliar with investment terminology.  Check it out and before long you will be much more confident when you read about investments.  It is always a good idea to understand how your money is being invested, even if you have a managed portfolio through your financial institution.

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