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Financial terms

Jargon-free financial terms.

Understanding some basic financial definitions is essential when investing.

Whenever you’re studying something new or want to take your knowledge to the next level, there will be new ideas, concepts and terminology to be learned. Part of the learning process is knowing and developing your understanding of a subject’s language. Increasing your financial vocabulary (or Financial IQ, as some call it) will enable you to grasp more complex concepts, faster.

 

Below is a short (and growing) list of some basic financial terms and what they mean. Please take a moment to look and see how many you already understand. You might be surprised.

 

  • Account: A relationship you have with a financial institution such as a bank or lender.
  • Assets: Items that you own of value.
  • Debts: Money you owe (most likely to a financial institution, such as a bank).
  • Net income: How much of your income remains after paying all of your bills.
  • Ticker symbol: One or more letters used to identify a stock or mutual fund.
  • APR or “Annual Percentage Rate”: The fee, or interest rate, that you pay annually to borrow money.
  • Budget: Planned limits you place on spending.
  • Credit score: A numerical value given to everyone and used to determine how risky of an investment you are for a financial institution, like a mortgage lender.
  • Investments: Financial products that you purchase with the intention of the value growing over time.
  • Market value: The current value of any assets, including stocks, bonds, funds and any investments you personally own.
  • Net worth: A measurement of your financial standing; what’s left of your assets after you subtract your debts.

 

Every few weeks we will be adding more terms along with their short explanation, so keep checking back or bookmark this page for future reference!

 

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Image courtesy of ddpavumba / FreeDigitalPhotos.net

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