Glossary
Explore key investing terms and grow your financial knowledge! 🚀✨
🚀✨Jump to a letter:
A | B | C | D | E | F | H | I | L | M | N | O | P | R | S | T | V
A
Active Trading
A strategy involving frequent buying and selling of assets to capitalize on short-term market movements.
Asset
Anything of economic value you own — like stocks, bonds, or property — expected to provide future benefit.
Asset Allocation
Dividing your investments among different asset classes (e.g., stocks, bonds, cash) to balance risk and reward.
Asset Class
A group of investments that behave similarly in the market, such as equities (stocks), fixed income (bonds), or real estate.
B
Bear Market
A market condition where prices decline by 20% or more, often driven by investor pessimism or economic downturns.
Bid and Ask
The bid is the highest price a buyer is willing to pay; the ask is the lowest price a seller will accept. The difference is the "spread."
Blue Chip Stocks
Shares of large, well-established, and financially sound companies with a track record of stable performance.
Bonds
A type of loan made to corporations or governments that pays periodic interest and returns the principal at maturity.
Book Value
The net value of a company’s assets, calculated as total assets minus liabilities and intangible assets.
Bull Market
A market where prices rise significantly, often fueled by economic strength, investor confidence, or increased corporate earnings.
Buy
The action of purchasing an asset or security with the intention of profiting from its future growth.
C
Capital Gains
The profit earned when an asset is sold for more than its original purchase price.
Cash Account
A brokerage account where all purchases must be fully paid for with cash — no borrowing allowed.
Commodities
Physical goods such as gold, oil, or agricultural products that can be bought, sold, or traded.
Common Stock
Shares that represent ownership in a company, typically providing voting rights and dividends.
Compound Interest
Interest earned on both your initial investment and the accumulated interest — "interest on interest."
D
Derivatives
Financial instruments whose value is derived from an underlying asset, like stocks, commodities, or currencies.
Dividend Yield
A financial ratio that shows how much a company pays in dividends each year relative to its stock price.
Dividends
A portion of a company’s profits paid to shareholders, typically on a regular basis.
Dollar Cost Averaging
Investing a fixed amount regularly, regardless of market conditions, to reduce the impact of volatility.
DRIP (Dividend Reinvestment Plan)
A program that allows investors to reinvest dividends into additional shares of the stock instead of receiving cash payouts.
E
EPS (Earnings Per Share)
A company’s profit divided by the number of outstanding shares, indicating profitability.
ESG Investment Funds
Funds that invest in companies with strong environmental, social, and governance practices.
ETF (Exchange-Traded Fund)
A fund that tracks an index, sector, or asset and trades on an exchange like a stock.
F
FHSA (First Home Savings Account)
A Canadian tax-advantaged account designed to help first-time homebuyers save for their first property.
Fundamental Analysis
A method of evaluating a security by examining financial data, management, and industry conditions to assess its intrinsic value.
Futures
Contracts to buy or sell an asset at a predetermined price on a specified future date.
H
Hedge
An investment made to reduce the risk of adverse price movements in another asset.
Hedge Fund
An investment fund that employs diverse strategies to generate high returns, often with higher risk and fees.
Holding a Stock
The act of owning a company’s shares, typically with a long-term perspective.
I
Index
A collection of stocks representing a segment of the market, such as the S&P 500.
Index Fund
A mutual fund or ETF designed to track a specific market index’s performance.
Initial Public Offering (IPO)
The first sale of a company’s stock to the public, allowing it to raise capital.
L
Leverage
Using borrowed capital to increase potential returns — though it also amplifies potential losses.
Liability
A financial obligation or debt that a company or individual must repay.
M
Margin Account
A brokerage account that allows you to borrow money to buy investments, increasing buying power — and risk.
Margin Lending
The act of borrowing against your existing portfolio to invest more.
Market Capitalization
The total value of a company’s outstanding shares, calculated as stock price multiplied by shares outstanding.
Market Order
An order to buy or sell a stock immediately at the current market price.
Market Timing
The strategy of trying to predict market movements to buy low and sell high — notoriously difficult to execute successfully.
MER (Management Expense Ratio)
The percentage of a fund’s assets deducted annually to cover operating expenses.
Mutual Funds
Pooled investments managed by professionals that include a diversified mix of stocks, bonds, or other assets.
N
Non-registered Investment Account (Non-reg)
A taxable account that doesn’t have the tax benefits of registered accounts like RRSPs or TFSAs.
O
Options
Contracts that give you the right — but not the obligation — to buy or sell an asset at a set price within a specific timeframe.
P
P/E (Price-to-Earnings Ratio)
A valuation ratio that compares a company's share price to its earnings per share — a measure of how much investors are willing to pay per dollar of earnings.
Portfolio
A collection of various investments (stocks, bonds, ETFs, etc.) held by an individual or institution.
Portfolio Management
The strategic process of building and maintaining a balanced investment portfolio to meet financial goals.
Preferred Stock
A type of stock that typically pays fixed dividends and has priority over common stock in the event of a company’s liquidation, but usually lacks voting rights.
Price-to-Earnings Ratio (P/E)
(See P/E above)
Prime Rate
The interest rate banks charge their most creditworthy customers — often used as a benchmark for other loans.
R
Real Estate
Property consisting of land or buildings, which can be an investment asset generating rental income or appreciating in value.
REIT (Real Estate Investment Trust)
A company that owns, operates, or finances income-generating real estate, allowing investors to buy shares of the trust like a stock.
RESP (Registered Education Savings Plan)
A Canadian tax-advantaged savings plan designed to help families save for a child's post-secondary education.
Risk Tolerance
An investor’s ability and willingness to endure market volatility and potential losses in pursuit of returns.
RRSP (Registered Retirement Savings Plan)
A Canadian tax-advantaged account designed to help individuals save for retirement, offering tax deductions and deferred growth.
S
Securities
Financial instruments that hold monetary value, such as stocks, bonds, ETFs, or mutual funds.
Sell
The action of exchanging an asset for cash, typically to realize a profit or cut losses.
Short Selling
A strategy where an investor borrows shares, sells them at the current price, and aims to buy them back later at a lower price — profiting from the decline.
Standard & Poor’s 500 (S&P 500)
An index of 500 leading publicly traded companies in the U.S., widely regarded as a benchmark for the overall stock market’s performance.
Stock Exchange
A marketplace where stocks and other securities are bought and sold — examples include the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).
Stocks
Shares representing partial ownership in a company. Also known as equities.
T
Technical Analysis
A method of evaluating securities by analyzing statistical trends from trading activity — like price movements and volume — to predict future price behavior.
Term Deposits
A savings product (like a GIC) where you deposit money for a fixed period and earn interest, typically with little risk.
TFSA (Tax-Free Savings Account)
A Canadian investment account where you can grow your money tax-free and withdraw it anytime without penalties.
Ticker Symbol
A unique combination of letters representing a publicly traded company’s stock on an exchange — e.g., AAPL for Apple.
Time Horizon
The length of time an investor plans to hold an investment before needing the funds — a crucial factor in determining risk tolerance and strategy.
Toronto Stock Exchange Composite (TSX)
The benchmark stock index of the Toronto Stock Exchange, tracking the performance of large companies listed in Canada.
V
Volatility
The degree of variation in an asset's price over time — high volatility means larger price swings, while low volatility means more stable prices.