Investment terminology: your ultimate investment jargon buster

5 mins readLast updated October 4, 2023by Kate Morgan

To help you get your head around investing terminology, we’ve put some of the most important jargon in one place.

Whether you’re just starting out on your financial journey, or have one eye on retirement, you may be looking at investing to shore up your finances. But the language of finance can be difficult to understand for the uninitiated. There’s a lot of jargon to learn — or else, you’ll be spending plenty of time Googling definitions.


A resource wielding economic value that is controlled by an individual, corporation or country.

The expectation is that an asset will provide a future benefit such as generating cash flow, reducing expenses or improving sales.

Asset Management

Acquiring, maintaining and trading investments that are deemed as having the potential to increase in value over time, with the ultimate aim of increasing total wealth.  

Asset class

A group of investments that are similar in their characteristics, and as such are subject to the same laws and regulations.

Historically, asset classes have included equities (e.g., stocks), fixed income (e.g., bonds), and cash equivalent or money market instruments.

However, in today’s market, many consider there to be additional asset classes, including real estate and cryptocurrencies.  

Bear and Bull Markets

A bear market is characterized by falling prices over a period of months or years and is generally a time for pessimism.

Conversely, bull markets occur when prices rise over a similar time period. The terms can be applied to anything that is traded. Since 1942, or in 936 months of data, 784 months occurred in bull markets, and only 153 in bear markets.

In that time, the average bull market lasted 52.8 months, while bear markets lasted only 11.3 months on average.  


A fixed-income instrument that represents the ownership of debt. A bond is essentially a loan between a company or government and an investor, and can be viewed in the form of an I.O.U. 


A catch-all term describing anything of value or benefit to its owners. It could be something physical, like a property, or the financial assets of a business.  

Dow Jones Industrial Average (Dow)

Also known as the Dow 30. The most commonly used indicator of stock market performance, based on prices of 30 actively traded blue-chip stocks.  


A risk management strategy that combines a variety of investments within a portfolio.

A portfolio made up of different kinds of assets should yield higher long-term returns while lowering the risk that comes with each of these assets. 

Federal Reserve Board (The Fed)

The governing board of the Federal Reserve System, which regulates the money supply in the US. Its primary purposes are to control inflationary pressures, support economic growth, and promote maximum employment. 


A general rise in the price level of goods and services in the economy. It is often equated with a loss of purchasing power.

From 1960 to 2021, The inflation rate for consumer prices in the United States moved between -0.4 per cent and 13.5 per cent, with an average annual rate of 3.8 per cent.  


How easily or efficiently an asset or security can be turned into cash without impacting its market price. Cash, therefore, is the most liquid asset you can own.  

Mutual fund

A fund that is operated by an investment company. It raises money from shareholders, which it then invests in securities like stocks, bonds or commodities. 


When an organization or individual owns a collection of investments, its accumulative wealth is called a portfolio.

This is managed as a collective whole rather than as individual assets, with set financial goals in mind. 

Real Estate

A form of real property, real estate is a portion of land and any structures attached to it.

Conversely, personal property such as a vehicle is not permanently attached to the land. The US real estate market was valued at $11.4 trillion in 2021.


An economic downturn defined by many economists as the occurrence of two or more consecutive quarters of decline in a country’s gross domestic product. The US has experienced 34 recessions since 1857.  

Risk tolerance

One of the most important components in investing, risk tolerance is the degree of risk that an investor is willing to accept in regard to the volatility in an investment’s value.

Risk tolerance can determine how investors operate, and how much profit they make over a given period. 


A security that represents a part-ownership in a corporation. Stocks are a long-term, growth-oriented investment; a unit of a stock is called a share, and a share entitles an investor owner to a portion of the corporation’s assets and profits that equates to the amount of the stock they own.  

Tax Planning

The analysis of an individual or company’s financial situation with a view to ensuring that as little tax is paid as possible. Doing so, and minimizing the amount of tax that is paid, is referred to as being tax efficient. 


How much and how often an investment fluctuates in value.


Earnings generated from an investment over a period of time. An investment’s yield is expressed as a percentage based on either the invested amount, the market value of the investment, or the face value of the security.  

Content writer

Kate Morgan

Kate has written for leading publications and blue chip companies over the last 20 years.