Galia Gichon from Down to Earth Finance says, “It’s hard to get ahead financially when you can’t even speak the lingo. We often get stuck in not understanding key terms and are not able to move towards seeing financial goals come to fruition!”
Fortunately, in her recent newsletter, which is excerpted from her My Money Matters Kit, she gives us a quick vocabulary lesson to clear up some important financial terms related to investing.
Can You Speak Finance Lingo?
Start by figuring out if you understand these key terms. Then show off to your friends and use them in a sentence. I guarantee they will be impressed.
- Growth: Stocks of companies that are emerging and tend to be small. They are in a relatively new market sector, such as technology or biotechnology.
- Value: Stocks of companies that trade at a lower price than the company’s earnings would seem to merit. The price of the stock tends to remain steady and they offer regular dividend payments. They tend to be safer than growth stocks
- Blend: One mutual fund that holds both Growth and Value stocks.
- Cap: Short for capitalization. How much the stock is worth on the stock market.
- Large-cap: Market capitalization is more than $10 billion. Large-cap mutual fund is one that only holds stocks worth more than $10 billion.
- Mid-cap: Market capitalization is between $3 billion and $10 billion
- Small-cap: Market capitalization is less than $3 billion
- Bond: An investment where you receive a fixed interest rate on a certain amount of money for a period of time. Also called Fixed Income.
- Balanced: One mutual fund that holds both stocks and bonds. Also called Domestic Hybrid and Moderate Allocation.
- International: Mutual fund that invests in stocks or bonds outside of the United States.
- Lifestyle or Target: Mutual fund that picks a variety of different mutual funds based on a specific year – ideally the year you want to retire.
- Money Market: A group of short-term treasury bonds. Considered very safe but slightly riskier than a regular savings account.
BTW: Ready to learn all the tools you need to get your finances on-track? Check out Galia’s My Money Matters Kit. It’s approachable, organized, and easy-to-follow. And you can sign up for Galia’s newsletter here.