Every word, in plain English
Jargon is a barrier, not a badge. Tap any underlined term anywhere in InvestStart for the same plain-language definition you'll find here.
- Asset allocation
- Asset allocation is the mix — how much sits in Safety, Income, Growth and Opportunity. It is a decision about jobs, not about picking winners.
- Bear market
- Commonly described as a drop of roughly 20% or more from a recent high. Bear markets are uncomfortable, historically recurring, and temporary in duration — though nobody knows how long any one will last.
- Brokerage account
- A container, not an investment itself. What matters is what you put inside it and what job that money has.
- Bull market
- A stretch where prices broadly move upward. It can make risk feel smaller than it actually is.
- Capital gain
- A gain is only realised when you sell. Until then it is unrealised — a number on a screen that can still change.
- Compounding
- When money grows, the new total can grow too. Over long periods this stacking effect becomes the main driver of long-term outcomes — in hypothetical examples and in history alike.
- Time in the market matters more than perfect timing.
- Correction
- A smaller, shorter decline than a bear market. Historically common — often several times a decade.
- Diversification
- Diversification means not depending on one single company, country or asset. When one part struggles, others may behave differently.
- It reduces the damage any single mistake can do.
- Dividend
- Some companies and funds pay part of their profits to holders in cash. That cash can be spent or reinvested.
- Dollar-cost averaging
- Contributing on a schedule instead of guessing entry points. You buy more units when prices are lower and fewer when they are higher.
- Emergency fund
- Money set aside so an unexpected bill never forces you to sell long-term investments at a bad moment. That is your Safety Number.
- ETF
- An exchange-traded fund holds many investments inside one ticker. Buying one unit means owning a slice of everything inside it.
- Expense ratio
- A percentage taken automatically each year to run the fund. It is quiet, so it is easy to ignore — and it compounds just like returns do.
- Index
- An index measures the combined value of many companies at once. Instead of one company's story, you see the average of many.
- Inflation
- Prices rise, so the same amount of cash buys less later. It is the quiet reason that holding everything in cash carries its own risk.
- Liquidity
- Liquid money can be reached in days without penalty. Illiquid money may take time, fees, or a bad price to access.
- Your Safety bucket needs liquidity more than it needs returns.
- Principal
- Your own contribution, separate from any growth on top of it.
- Rebalancing
- Over time one bucket grows faster and drifts out of proportion. Rebalancing brings the split back to the plan you chose while calm.
- Risk tolerance
- Part maths, part temperament. Your real tolerance shows up when values fall, not when you answer a questionnaire on a calm day.
- Time horizon
- The deadline attached to a pot of money. A short horizon usually points to Safety and Income; a long horizon gives Growth room to work.
- Volatility
- Volatility describes how bumpy the ride is, not whether something is good or bad. A volatile investment can swing widely in both directions over short periods.
- Money you need soon usually belongs somewhere less bumpy.
- Yield
- Yield expresses annual income relative to what something costs today. A high yield is not automatically good — it sometimes signals higher risk.
Educational disclaimer. InvestStart provides general educational information and simulated investing experiences. It does not provide personalized financial, investment, tax, or legal advice. Simulated results are hypothetical and do not predict future investment performance. Consider consulting a qualified professional for advice specific to your circumstances.