Investing Terms 101

This glossary helps you understand the investing terms that are commonly used in the financial  industry. (but are also commonly misunderstood!)


Welcome to our Financial Terms Glossary

This glossary is broken down alphabetically. It does not include every financial term under the sun, but it contains many financial terms that are commonly asked about / searched for.

This glossary is meant to simplify financial jargon. Instead of giving you the same old boring definitions, our team put together a 'translation' to accompany each definition. Each translation may include an example that is fictitious and not specific to any individual.

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Annual Percentage Rate (APR)

  • Financial Speak: The yearly cost of borrowing money.
  • Translation: The yearly fee you pay for borrowing money, shown as a percentage of the amount you borrowed.


  • Financial Speak: Insurance products that provide a regular stream of income during retirement in exchange for a lump-sum payment or series of payments.
  • Translation: Paying a big chunk of money or regular payments to an insurance company, so they’ll send you regular checks in the future, usually after you retire. There are different types, like ones that start paying right away and others that pay later, with some offering fixed amounts while others could change based on how investments perform.

Asset Allocation

  • Financial Speak: Diversifying your investments to optimize risk and return.
  • Translation: Investing your money in different assets like stocks, bonds, or real estate to balance the chances of making or losing money.

Assets Under Management (AUM)

  • Financial Speak: The total market value of the investments managed by a financial advisor or firm on behalf of clients.
  • Translation: The amount of money that a financial advisor or a financial company is managing for their clients. It's a summary of all the cash, stocks, bonds, and other investments added up to show how much an advisor is managing in total assets.

    click here to read our detailed guide on AUM fees and how to calculate them


Blue-Chip Stocks

  • Financial Speak: Shares of large, well-established, and financially stable companies.
  • Translation: Investing in big, reliable companies known for their quality and ability to endure tough times.


  • Financial Speak: A debt security that pays periodic interest.
  • Translation: Lending money to a company or government, and they’ll pay you back with a little extra after a certain time.

Bull Market and Bear Market

  • Financial Speak: Periods of rising (bull) and falling (bear) market prices.
  • Translation: When the stock market is doing well it’s called a bull market, and when it’s doing poorly it’s called a bear market.
Image illustrating a bull market with an upward trend symbolized by a bullish figure and a bear market with a downward trend symbolized by a bearish figure, used in an article about finance terms 101.


Capital Gains and Losses

  • Financial Speak: The profit or loss from selling an investment.
  • Translation: Money made or lost from selling investments like stocks or property.

Compound Interest

  • Financial Speak: Earning interest on both the initial amount and the accumulated interest.
  • Translation: Money earned from interest also earns interest, making your money grow faster over time.



  • Financial Speak: Spreading investments to manage risk.
  • Translation: Don’t put all your eggs in one basket; spread your money around to lessen risk.


  • Financial Speak: A portion of a company's earnings distributed to shareholders.
  • Translation: Extra money you get for owning shares in a company, usually paid quarterly.

Dollar-Cost Averaging (DCA)

  • Financial Speak: Consistently investing a fixed amount over time, regardless of market fluctuations.
  • Translation: Regularly putting the same amount of money into investments, even when prices go up or down, to help balance out the ups and downs of the market.
Illustration showing the concept of Dollar-Cost Averaging (DCA) with a graph and dollar symbols, used in an article about finance terms 101.



  • Financial Speak: Ownership interest in a company.
  • Translation: A fancy word for stocks, representing a piece of ownership in a company.

Exchange-Traded Fund (ETF)

  • Financial Speak: A basket of securities traded on an exchange.
  • Translation: A collection of stocks or bonds you can buy and sell like a single stock.

Emergency Fund

  • Financial Speak: A savings account designated for unforeseen expenses or financial difficulties.
  • Translation: Money you save for a rainy day, like unexpected bills or losing your job. This fund helps keep you afloat without going into debt.



  • Financial Speak: A legal or ethical relationship of trust between two or more parties, typically a fiduciary and a principal.
  • Translation: Someone who is required to act in your best interest, especially when it comes to managing your money or property. Think of it like a trusted financial advisor who must put your needs first.

Fiduciary Deed

  • Financial Speak: A legal document by which a fiduciary transfers property title when acting in their official capacity.
  • Translation: A type of document used when someone in charge of managing someone else’s property, like a trustee or executor, needs to transfer that property. It’s like a guarantee that the person in charge is acting in the best interest of the property owner.

Financial Planner

Fixed Income

  • Financial Speak: Investments paying a fixed rate of return.
  • Translation: Investments like bonds that pay you a set amount regularly.


Hedge Funds

  • Financial Speak: Private investment partnerships that employ various strategies to earn active returns for their investors.
  • Translation: Exclusive investment groups that use complex strategies to try and make a lot of money, mostly for wealthy investors.


Index Fund

  • Financial Speak: A type of mutual fund with a portfolio constructed to match or track the components of a market index.
  • Translation: A fund that follows the ups and downs of stock market indexes like the S&P 500, aiming for steady, long-term growth.

Inflation Risk

  • Financial Speak: The risk that your money won't keep up with increasing prices. This term refers to the potential loss of purchasing power due to rising prices over time. As the cost of goods and services increases, each dollar you've saved can buy less, which may impact your long-term financial goals.
  • Translation: The chance that your savings will lose value because things get more expensive over time.
Illustration highlighting the concept of Inflation Risk with icons representing increasing prices, featured in an article about finance terms 101.



  • Financial Speak: The ease with which an asset can be converted to cash.
  • Translation: How quickly you can turn an investment into cash.


Mutual Fund

  • Financial Speak: An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
  • Translation: A pool of money from many investors used to buy a mix of stocks, bonds, or other investments, managed by a professional.


Risk Tolerance

  • Financial Speak: Your ability and willingness to endure investment losses.
  • Translation: How comfy you are with the idea of losing some money on your investments for the chance to make more later.

Roth IRA and Traditional IRA

  • Financial Speak: Tax-advantaged retirement accounts.
  • Translation: Special accounts to save for retirement; Roth IRA gives you a tax break later, Traditional IRA gives you a tax break now.


Short Selling

  • Financial Speak: Selling a security that is not owned by the seller, or that the seller has borrowed, betting that the price will go down.
  • Translation: Basically, betting that a stock price will go down. How? By borrowing a stock, selling it, and hoping to buy it back later at a lower price to make a profit.

S&P 500 Index

  • Financial Speak: A popular indicator of the stock market's overall strength, made up of 500 large American companies.
  • Translation: A group of 500 big U.S. companies whose combined performance helps show how well the stock market is doing. This widely-followed benchmark represents the performance of the U.S. stock market by tracking the 500 largest publicly-traded companies in terms of market capitalization. Often used as a proxy for overall market health, it serves as a useful comparison tool for individual investments or portfolio performance.


Tax-Efficient Investing

  • Financial Speak: Strategies to minimize tax liability.
  • Translation: Making investment choices to keep your tax bill as low as possible.

Time Horizon

  • Financial Speak: The expected duration of holding an investment.
  • Translation: How long you plan to keep your money invested before needing it.
Illustration of Time Horizon with a road map icon, representing the expected duration of holding an investment, featured in an article about finance terms 101.

Tax-Loss Harvesting

  • Financial Speak: Selling poorly performing investments to balance out the taxes you owe on your successful ones.
  • Translation: Getting rid of investments that are losing money so you pay less in taxes on the money you've made from other investments. This strategy involves selling underperforming investments to offset taxable gains and reduce tax liability. It can be a useful tool for investors looking to minimize the impact of taxes on their investment returns.



  • Financial Speak: The degree of variation of a trading price series over time.
  • Translation: How much and how quickly the value of an investment or the market can change.



  • Financial Speak: An employer-sponsored retirement savings plan allowing employees to make pre-tax contributions, often matched by the employer, to save for retirement.
  • Translation: A special account from your job where you put in some money from your paycheck before taxes are taken out. Often, your boss will throw in some extra money too. This money is tucked away for when you retire, growing over time, and you’ll pay taxes on it when you take it out later.

    👉 have you heard of a 401k rollover?


  • Financial Speak: A tax-advantaged retirement savings plan similar to a 401(k) but designed for employees of public schools, non-profit organizations, and certain religious institutions.
  • Translation: Like a 401(k), but for people who work at places like schools, charities, or certain religious spots. You put away money from your paycheck before taxes, maybe get some extra from your employer, and it grows until you take it out when you're retired, paying the taxes then.


529 Plan


If you read through this guide and still have questions, please feel free to contact us. Please direct your questions to our contact page.

For questions connected to using AdvisorFinder, please read How to Find a Financial Advisor on AdvisorFinder or contact our support team.

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