Glossary
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.