A
- Asset Allocation – The process of dividing an investment portfolio among different asset classes such as stocks, bonds, and cash to balance risk and return.
- Australian Securities Exchange (ASX) – The primary stock exchange in Australia where stocks, ETFs, and other securities are traded.
- Annualized Return – The geometric average amount of money earned by an investment each year over a given time period.
B
- Bear Market – A market condition in which stock prices decline by 20% or more from recent highs, often due to economic downturns.
- Blue-Chip Stocks – Shares of large, established companies with a history of stable earnings and dividends, often considered lower-risk investments.
- Bond – A fixed-income security where an investor lends money to a company or government in exchange for periodic interest payments and the return of principal at maturity.
- Bull Market – A market condition in which stock prices rise significantly over a prolonged period, typically driven by strong economic growth.
C
- Capital Gains – The profit earned from selling an asset, such as stocks or real estate, at a higher price than the purchase price.
- Commodities – Raw materials like gold, oil, and wheat that are traded in financial markets.
- Contract for Difference (CFD) – A leveraged financial derivative that allows investors to speculate on the price movements of an asset without owning the underlying asset.
- Corporate Bond – A debt security issued by a corporation to raise capital, typically offering higher yields than government bonds.
- Cryptocurrency – A digital or virtual currency that uses cryptographic technology for security, such as Bitcoin or Ethereum.
D
- Day Trading – The practice of buying and selling financial instruments within the same trading day to capitalize on short-term price movements.
- Diversification – A risk management strategy that involves spreading investments across various asset classes to reduce exposure to any single risk.
- Dividend – A portion of a company’s earnings paid to shareholders, typically on a quarterly basis.
E
- Earnings Per Share (EPS) – A company’s net profit divided by the number of outstanding shares, indicating profitability.
- Exchange-Traded Fund (ETF) – A fund that trades on an exchange like a stock and holds a diversified portfolio of assets.
- Equity – Ownership interest in a company, typically in the form of stocks.
F
- Fixed Income – Investments that provide regular interest payments, such as bonds and term deposits.
- Forex (Foreign Exchange Market) – The global marketplace for trading national currencies.
- Futures Contract – A standardized agreement to buy or sell an asset at a predetermined price at a future date.
G
- Gross Domestic Product (GDP) – The total value of goods and services produced within a country, used as a key indicator of economic performance.
- Government Bond – A debt security issued by a government to finance spending, considered a low-risk investment.
H
- Hedge Fund – A pooled investment fund that employs various strategies to earn returns for its investors, often using leverage and derivatives.
- High-Yield Bond (Junk Bond) – A corporate bond with a lower credit rating that offers higher returns to compensate for increased risk.
I
- Index Fund – A type of mutual fund or ETF designed to track the performance of a market index, such as the S&P 500 or ASX 200.
- Inflation – The rate at which the general level of prices for goods and services rises, reducing purchasing power.
- Initial Public Offering (IPO) – The process by which a private company becomes publicly traded by offering shares to investors for the first time.
L
- Leverage – The use of borrowed capital to increase the potential return of an investment, often used in trading.
- Liquidity – The ease with which an asset can be converted into cash without affecting its price.
M
- Market Capitalization (Market Cap) – The total value of a company’s outstanding shares, calculated by multiplying share price by the number of shares.
- Mergers and Acquisitions (M&A) – The consolidation of companies through buying, selling, or merging businesses.
- Mutual Fund – An investment vehicle that pools money from multiple investors to buy a diversified portfolio of assets.
N
- Net Asset Value (NAV) – The total value of an investment fund’s assets minus its liabilities, used to determine the price of mutual funds and ETFs.
- Negative Gearing – A strategy where an investor borrows money to invest in an asset that generates income, but expenses exceed revenue, creating a tax benefit.
O
- Options Contract – A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price before a certain date.
- Over-the-Counter (OTC) Market – A decentralized market where financial instruments are traded directly between parties, rather than on a formal exchange.
P
- Passive Investing – A long-term investment strategy that aims to replicate the performance of a market index rather than actively selecting individual stocks.
- Portfolio – A collection of financial assets such as stocks, bonds, and cash held by an investor.
- Price-to-Earnings Ratio (P/E Ratio) – A valuation metric that compares a company’s stock price to its earnings per share.
R
- Real Estate Investment Trust (REIT) – A company that owns and manages income-producing real estate properties and offers shares to investors.
- Risk Tolerance – An investor’s ability and willingness to endure losses in pursuit of potential gains.
S
- Short Selling – A trading strategy where an investor borrows shares to sell them at the current price, aiming to buy them back at a lower price for profit.
- Stock Buyback – When a company repurchases its own shares from the market, often to boost share price or improve financial ratios.
- Superannuation – Australia’s compulsory retirement savings system, where employees contribute a percentage of their salary into a managed investment fund.
T
- Technical Analysis – A method of evaluating securities by analyzing price charts and statistical indicators to predict future movements.
- Term Deposit – A fixed-term investment offered by banks that provides a guaranteed return over a set period.
- Trading Volume – The total number of shares or contracts traded in a security or market during a given period.
V
- Volatility – The degree of variation in the price of a financial instrument over time, often used as a measure of risk.
- Value Investing – A strategy where investors seek undervalued stocks trading below their intrinsic value.
Y
- Yield – The income generated from an investment, often expressed as a percentage, such as bond yield or dividend yield.
- Yield Curve – A graphical representation of interest rates on bonds of different maturities, used as an indicator of economic conditions.