You could say that being knowledgeable about financial jargon is similar to being able to speak another language. You are privy to understanding more and therefore will likely make better decisions when investing. When you’re not familiar with the meanings of certain terms it can put you at a disadvantage. These are some useful financial jargon definitions to get you started and tips on growing your knowledge further.
Financial terms
Shareholders equity
This refers to the amount of money that would be paid to the company’s shareholders after all assets are liquidated and all the company debts are paid.
Liabilities
This refers to the debts of a company and other financial obligations.
Liquid Assets
This is money or assets that can be readily converted into cash.
Private Equity
Financial assets made up of securities, shares, and bonds that are not publicly traded or listed on a stock exchange.
Unit Trust
A fund of shares, bonds and other assets held by a manager for the benefit of investors who buy units in the fund, effectively pooling their money with that of other investors. The price of the units is determined by the market value of the assets that the pooled funds are invested in.
Yield
It's the rate of return on an investment in percentage terms; yield takes into account the annual income and any change in capital value.
Three tips to improve knowledge
- Try not to feel intimidated by the words and phrases you don’t recognise.
- As you encounter terms that are unfamiliar to you, write them down and make time to get their definitions.
- Follow knowledgeable people. There are many finance experts around the world who share information freely via their social pages, websites, podcasts, and other platforms.
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