top of page

aurorasoul.com

AJE ECO Investing 101: understanding Terminology and types of Investments

Beginner Investor? Here’s some terminology to help guide you.



Common stock: A type of security that represents ownership in a corporation. Common stockholders may receive a share of the company's profits (dividends) and are entitled to voting rights.

Preferred stock: A type of security that ranks ahead of common stock in terms of dividends and claims on assets in the event of liquidation. Preferred stockholders do not have voting rights.

Dividend: A portion of a company's profits that is paid to its shareholders. Dividends can be paid in cash, stock, or other assets.

Capital gain: The profit made from the sale of an asset, such as a stock, bond, or real estate.

Capital loss: The loss made from the sale of an asset.



Liquidity: The ability to easily convert an asset into cash without losing value.

Risk: The possibility of losing money on an investment.

Return: The profit or loss made on an investment.

Diversification: The practice of investing in a variety of assets to reduce risk.

Portfolio: A collection of investments.

Brokerage account: An account that is used to buy and sell stocks, bonds, and other investments.

Investment advisor: A professional who provides advice on investments.



Beta: A measure of a stock's volatility relative to the market.

PE ratio: The price of a stock divided by its earnings per share.

Yield: The income generated by an investment, such as a dividend or interest.

Short selling: The practice of selling borrowed shares of stock in the hope that the price will fall and the shares can be bought back at a lower price.

Margin trading: The practice of borrowing money from a broker to buy stocks.

Options: A contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Futures: A contract that obligates the buyer to buy an asset at a specified price on or before a specified date.


AJE ECO Terminology; Types Of Investments



Here are some other types of investments:

Stocks: A type of security that represents ownership in a company. Stocks can be bought and sold on stock exchanges.

Bonds: A type of debt security that is issued by governments or corporations. Bonds pay interest to the investor over a specified period of time.

Mutual funds: A type of investment fund that pools money from many investors and invests it in a variety of securities.


Exchange-traded funds (ETFs): A type of investment fund that tracks an index, such as the S&P 500. ETFs can be bought and sold on stock exchanges just like stocks.

Real estate: A type of investment that involves buying and owning property. Real estate can be a good investment for investors who are looking for long-term growth.

Cash: A type of investment that is not subject to market fluctuations. Cash is a good investment for investors who are looking to preserve their capital.



Types of Investment Funds.



A hedge fund is an investment fund that uses a variety of techniques, including short selling and leverage, to try to make profits in both rising and falling markets. Hedge funds are typically open only to accredited investors, who have a high net worth or income.


A mutual fund is a type of investment fund that pools money from many investors and invests it in a variety of securities, such as stocks, bonds, and other assets. Mutual funds are available to all investors, regardless of their net worth or income.


Both hedge funds and mutual funds can be good investment options, but they are not right for everyone. Hedge funds are a good option for investors who are looking for high returns and are willing to take on high risk. Mutual funds are a good option for investors who are looking for a more conservative investment with lower risk.


here are some examples of different types of funds:


Stock funds: These funds invest in stocks, which are shares of ownership in a company. Stock funds can be either actively managed or passively managed. Actively managed funds have a portfolio manager who makes investment decisions about which stocks to buy and sell. Passively managed funds track a specific index, such as the S&P 500.


Bond funds: These funds invest in bonds, which are loans that are issued by governments or corporations. Bond funds can be either taxable or tax-exempt. Taxable bond funds pay interest that is subject to income tax. Tax-exempt bond funds pay interest that is not subject to income tax.


Mutual funds: These funds pool money from many investors and invest it in a variety of securities, such as stocks, bonds, and other assets. Mutual funds can be either open-ended or closed-ended. Open-ended funds issue new shares and redeem old shares on a daily basis. Closed-ended funds do not issue new shares once they have been created.


Exchange-traded funds (ETFs): These funds are similar to mutual funds, but they are traded on exchanges just like stocks. ETFs can be either actively managed or passively managed.


Real estate investment trusts (REITs): These funds invest in real estate, such as apartment buildings, office buildings, and shopping malls. REITs can be either equity REITs or mortgage REITs. Equity REITs invest in real estate properties. Mortgage REITs invest in mortgages.

Cash funds: These funds invest in cash and cash equivalents, such as money market funds and treasury bills. Cash funds are a good investment for investors who are looking to preserve their capital.


We hope this helps give you a reference point in your investment and wealth development journey. Sign up as a member or Subscribe for $1 for exclusive resources or join us on YouTube for Free and grow with us as we produce more fundamental content as a resource.

Comments


bottom of page