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Investing Intro
| Term | Definition |
|---|---|
| Diversification | a risk management strategy that mixes a wide variety of investments within a portfolio |
| Asset Allocation | an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon. |
| Compounding | is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. |
| Inflation | The rise in the general level of prices |
| Liquidity | refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price. |
| Dollar Cost Averaging | an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase |
| Risk | the chance that an outcome or investment's actual gains will differ from an expected outcome or return |
| Systematic Risk | the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy |
| Unsystematic Risk | the risk that is unique to a specific company or industry |
| Growth Investing | a more aggressive investing style to increase potential returns in less time |
| Income Investing | a more passive investing style to earn a consistent rate of return over time |
Created by:
ebostrand
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