5 Basic Investing Terms To Know
Investing money in stocks, real estate, and 401K account is a great way to save up for retirement. Many Americans plan to retire at the age of 40. However, they start planning very late. If you are in your early 20’s,you need to start retirement planning now. Otherwise, you won’t be able to go to your dream destination and enjoy a comfortable life after 40. But before you start investing, you need to learn its basics. In this blog post, we will share5 basic investing terms to help you get started.
5 Investment Terms
The investment landscape can be vast and dynamic. But those who make time to learn its basics soon mount to advance levels and become professional traders. Here basic investment terms you need to know before investing.
Stocks are also known as shares. These are marketable securities and part ownership in a company. When an investor buys stocks, they buy a percentage share of that particular company. Some stocks give regular dividends to their shareholders while others are sold at higher prices as the stock market changes.
Bonds are loans investors provide to their corporations or the government. When a business doesn’t want to apply for a bank loan, they resort to launching bonds. Bonds offer percentage-based interest to the lender in exchange for sharing their capital.
IPO stands for Initial Public Offering. When a company launches its shares for the first time, they are called IPOs. Initial public offerings are riskier than stocks because the companies associated with the mare relatively new in the stock market. Sometimes established brands also register in the stock market like Ali Baba and AirBnB. However, these brands aren’t guaranteed success in the stock market. The classic case of Facebook IPO is enough to tell anyone they should be careful investing in IPOS.
4. Bearish and Bullish Market
If you are new to the investment world, these terms will confuse you. Bearish and bullish are stock market jargon used by investors. Where bearish means a sluggish market where the share price is either constant or dropping, a bull market is when the stock prices are rising. These two terms are the polar opposite of each other, and investors forecast market dynamics and invest accordingly.
5. Defense Stock
The term defense stock is relatively new but very important. As you dig deeper into the investment work, you will learn stock portfolios. To develop the finances of sustaining losses and surviving in the stock market, traders buy shares in the health and blue-chip companies whose share price doesn’t change in response to economic conditions. Blue-chip companies include Coca-cola, Unilever, and other top-notch brands that have an established customer base.
Learning basic investment terms is important for anyone willing to start their trading career. Even if you are not ready to become a full-fledged trader, knowing these terms will help you invest in the right businesses for your retirement. Therefore, basic investment terms are essential for anyone ready to save money for an uncertain future.