12 Basic Investing Terms You Should Know

By: Regie Macalam

You've been reading so much business management articles to have a background on business. It is a great task to do. Business management is really a very delicate aspect of a business, what you will earn depends on it. And this I tell you, understanding what's the meaning of business is not that easy. For sure you will encounter words that are not familiar or sounds new to you. They are terminologies exclusively used for business. And so, to make the task easier, here are some investing terms I found inside a large investing glossary on the web called Investorwords.com.

Bonds - A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The Federal government, states, cities, corporations, and many other types of institutions sell bonds.

Stock - An instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation's assets and profits. Ownership in the company is determined by the number of shares a person owns divided by the total number of shares outstanding.

Debt - An amount owed to a person or organization for funds borrowed. Debt can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements.

Equity - Ownership interest in a corporation in the form of common stock or preferred stock. It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value.

Investor - An individual who commits money to investment products with the expectation of financial return.

Mutual Fund - An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public.

Annuities - A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement. The holder is taxed only when they start taking distributions or if they withdraw funds from the account.

Venture Capital - Funds made available for startup firms and small businesses with exceptional growth potential.

Total Return - The return on an investment, including income from dividends and interest, as well as appreciation or depreciation in the price of the security, over a given time period, usually a year.

Shareholder - One who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership comes a right to declared dividends and the right to vote on certain company matters, including the board of directors. also called stockholder.

Investment Strategy - An investor's plan of distributing assets among various investments, taking into consideration such factors as individual goals, risk tolerance and horizon.

Recession - A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.

These are just the basic terms that you should understand. There's still a lot of them once you start mingling with business industry. Continue studying terms. Having a good knowledge in business means heading to a good business future.

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Future Africa provides business consulting services that include business modeling, organizational transformation, business process modeling, people development, individual coaching and mentoring.

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