Whether you’re sitting on $ 5 of loose change or a $ 5 million piggy bank, if you intend to play the long game, the most valuable investment you can make has nothing to do with dollars. and cents: it’s time.
Set aside the time to learn the mechanics of buying and selling stocks (valued stocks, none of that speccy BS ad chatter). Understand how it is about time in the market, not timing the market. And most importantly, take the time to familiarize yourself with all the necessary definitions. The first barrier, of course, is built by the bricks of complicated lingo which, as you will soon find out, can all be broken down into easily digestible terms. This is why our friends from Actions – who want to help the average bettor financially – commissioned us to create this guide which you can refer to when you need it. Better yet – they give you $ 5 when you sign up on the Sharesies platform and use the code ‘BOSS’ to put your new knowledge into practice.
While you won’t exactly assume the position behind a Bloomberg platform, and there is no guarantee that you will outperform Warren Buffett as some crypto-trading hamster, at the very least you will become a trader. more informed.
Check it out below, bookmark it for later, and come back whenever you feel necessary.
Ask: The lowest price someone is willing to accept for their asset.
Active: Something that has the potential to make money, eg stocks, bonds, commodities, real estate, etc.
ASX: ASX is the main stock exchange in Australia, under its name “Australian Securities Exchange”.
Balance sheet: A financial statement for a specific time, describing what a business owns, its liabilities, as well as the equity in circulation.
Bear market / Bull market: The first refers to a time when the outlook for investors is pessimistic and the markets are falling. The latter refers to the contrary when all is optimism and these numbers keep climbing. An easy way to tell the two apart is to remember that bears slide down on you while bulls rush up.
Bid: The price someone is willing to pay for an investment.
Blue boat: Companies with a long history of profits, healthy balance sheets, and sometimes even regular dividend increases. Usually, they come from large cohesive industries e.g. banks, telecom operators etc.
Bind: An investment that represents what a certain entity owes you. Think of it like loaning money to a business, government, or whatever, with the promise that the principal will eventually be paid back with interest.
Book value: Subtract all of a company’s liabilities from assets and common stocks. What remains is the book value. It is regularly used as a valuation tool as opposed to the market value of the business.
Broker: Entity that buys and sells investments on behalf of an investor. There is usually a fee or commission charged when using a broker.
BTFD: âBuy The F * cking Dip,â which refers to buying an investment when prices are low.
Capital gain / Capital loss: The difference between the price you bought an investment for and the price you sell it for.
Capital gains tax: What you owe the government based on the profits you make on the sale of an investment. In Australia, it’s a fixed figure of 30%. But by holding an investment for more than 12 months, the capital gains tax is reduced by 50%. It could be a reason to act like Buffett and play the long game.
CBOE: Formerly known as the Chicago Board Options Exchange, now known as the CBOE, the exchange offers options on companies, indices and ETFs.
Diversification: When your portfolio includes several types of assets; as well as when your investments come from different sectors, industries and geographic locations. Like the old adage that ‘don’t put all your eggs in one basket’, the idea is that spreading out your investments could help reduce the impact on your portfolio if a certain industry or market doesn’t perform as well. Good.
Dividend: When a company shares part of its income among its shareholders. It can be monthly, quarterly, half-yearly, or even just once under specific conditions.
AND F : Exchange traded funds are a type of investment fund that tracks an index, sector, commodity, or other asset and trades like a stock. Although all forms of investing carry some level of risk, ETFs are generally considered to be safer investments.
Exchange: Where investments and assets can be bought and sold. Physical trading with trading floors still exists, but nowadays most of the action takes place digitally.
Hedge funds: A common investment fund actively managed by a professional and reserved for a wealthier clientele that trades relatively liquid assets. When it comes to investment choices, the risk is higher due to the different strategies i.e. buy with borrowed money, specialized assets, high minimum investment.
Stay on the line: To hold on and not sell stocks. It can be for a variety of reasons.
Index: A tool used to statistically measure the progress of stocks, bonds, or other assets with common characteristics.
Index fund: A type of mutual fund that allows an individual to buy investments that replicate the trends of an index. Unlike mutual funds and hedge funds, these are generally more passive investments with lower fees.
Initial Public Offering: Initial public offering – the process by which a private company begins to go public.
Leverage: Using borrowed capital – or cash – for an investment. The benefits of an investment are expected to exceed both the principal and the interest incurred. It should be noted that leverage increases the risk of an investment.
Long: Long positions or “going long on something” means that an investor owns a stock.
Margin: Similar to âleverage,â margin refers to the money borrowed from a broker to purchase an investment, and is the difference between the initial loan and the total value of the investment. Margin trading involves borrowing money from a broker to exchange an asset, which becomes collateral for the loan. Similar to leverage, margin increases the risk of an investment.
Market capitalisation: The total market value of a company calculated by multiplying the current share price by the number of shares outstanding.
Managed funds: A fund managed by a professional portfolio manager who purchases securities with pooled capital from individual investors. Managed funds are referred to as “mutual” funds in the United States and on US stock exchanges.
NASDAQ: One of the most famous exchanges in the world based in the United States. Its initials stand for the National Association of Securities Dealers Automated Quotations.
NYSE: Another of the most prolific exchanges in the world is the New York Stock Exchange, which trades the shares of companies all over the United States and some international transactions.
NZX: This acronym stands for New Zealand Exchange and manages the capital, risk and commodity markets in New Zealand.
Options: Contracts between two parties that give holders the right to buy or sell an underlying asset at a certain price within a specified period of time.
P / E ratio: How much you pay for every dollar a business earns. This is how investors can decide whether a stock is overvalued (high P / E ratio) or undervalued (low P / E ratio).
Pump and emptying: Manipulation of stock price involving artificial inflation through false or misleading positive statements before selling the affected stocks for a quick profit.
Recession: A period of two consecutive quarters in which a country experiences negative economic activity. Negative economic activity, of course, is often determined by a decline in gross domestic product (GDP).
Short: A short or short position is when someone “borrows” securities instead of holding them (or going long on them). The borrowed securities are then sold with the intention of buying them back and returning them at a lower price. The more its value decreases in the time between sale and redemption, the more profit is earned. If the value increases, the person (s) holding the short position will lose money. Increasing the mass value in this way is called short squeeze.
S&P 500: The Standard & Poor’s 500 is a stock market index that tracks the value of 500 companies in the United States.
Actions / Actions: Partial ownership of a business in exchange for money. The number of stocks or shares you own is obviously indicative of your level of ownership (also called Action which, contrary to the claims of many on the internet, does not always increase).
Yield: The ratio of what you paid for a stock to the dividend paid expressed as a percentage.
This glossary launches a partnership with the folks at Sharesies, which will educate and empower the average bettor who wants to take the leap and start investing in the ASX, NZX and US exchanges. Confused about where to start? Claim your $ 5 signup bonus today when you sign up on the Sharesies platform and use promo code ‘BOSS’, and bookmark this item for the next time you give Warren Buffet a run for his money.
Promotion T&Cs apply. $5 applies to new accounts only. T&Cs and fees apply for use of the platform provided by Sharesies Limited. This article is sponsored by and promotion is provided by Sharesies AU Pty Limited, as an authorised representative of Sanlam Private Wealth Pty Limited (AFSL No. 337927). All investing involves risk.