Glossary

Check out the glossary below for some of the most common financial terms. Still have questions? Head to Learn or Say Hello.

ETF

A financial instrument that pools stocks or bonds in one security that trades like a stock.

Bond

Like an IOU, issued by a government or a company. This IOU represents a promise by a borrower (the government or company) to pay you (the lender) the money lended (the principal) + interest over time.

Capital gains

The increase in value of an asset, like a stock. This gain is usually taxed once you sell the asset.

Diversification

A smart investment strategy that mixes a wide variety of investments within a portfolio. You can diversify your investments across asset classes, industries, or geographies. Don’t put all your eggs in one basket!

Dividends

A sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). Tip: you can automatically reinvest your dividend payments in order to accumulate more shares of stock!

IRA

An Individual Retirement Account (IRA) is a savings account with tax advantages that you can open to save and invest in the long term.

Stock

A security that represents the ownership of a fraction of a corporation. By owning a unit of stock (called a share), you are entitled to a part of a company’s assets and profits. It’s your piece of the company pie!

Stock exchange

A marketplace where securities (like stocks) are bought and sold. In the US, the most popular stock exchanges are the NASDAQ and the New York Stock Exchange (NYSE).