Basic Keywords

Investment : process of putting one’s money into some asset in order to get higher amount in return over a period of time

Asset : any entity that has value and can be converted to cash. Example: materials or equipment required to run a company, stock of a company, gold, real estate and many others

Liabilities : debt or obligations that have to be fulfilled/owed by a person or organisation towards lender/shareholders

Debt/Debt amount : Amount that needs to be payed to lender by the receiver

Capital : amount of money used for investing, in order to get a higher amount as return

Returns/Rate of return/Return on equity : means profits in an investment. Rate of return = 100 * (final amount – invested amount/invested amount)

Interest rate : rate of return earned by the lender or proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage

Asset allocation/Portfolio management : segregation of amount that needs to be invested into various asset classes

Asset classes/Financial instruments : types of investment choices. Example: company stocks, company bonds, bank bonds, real estate, gold, foreign currency, bitcoin, etc

Appreciating asset : Asset type that tends to have an increasing value over a period of time. Example: Real estate, Gold, company stock, etc

Depreciating asset : Asset type that tends to lose value over a period of time. Example: Personal use items such as Cars, Bikes, Mobile phones, Clothing, footwear, etc

Bonds : a common investment choice for investors by lending amount to an organization (bank or companies) as a loan/debt, at a fixed interest rate, decided by the organization

Income/Revenue/Sales : total money earned by a company for products or services they provide

PAT or Profit after tax : money left with investor after meeting all expenses and taxes for a given time (Quarter/Annual)

Stock/Share/Equity/Securities/Common stocks/Outstanding shares : a portion of company that represents ownership in that company usually bought by investors with a purpose to resell at a higher price or earn dividends

Markets / Stock market : a platform where companies are listed (in stock exchange) in order for investors to buy or sell shares of companies

Market Capitalization / Capitalization : total value of a company, calculated by multiplying the number of shares outstanding by the price per share.

Nifty 50/Nifty : top 50 companies in NSE stock exchange, usually chosen based on higher market capitalization

Sensex 30/Sensex: top 30 companies in BSE stock exchange, usually chosen based on higher market capitalization

Large Cap stocks/companies : Companies whose market capitalization is more than 20,000 crores

Mid Cap stocks/companies : Companies whose market capitalization is between 5000 crores and 20,000 crores

Large Cap stocks/companies : Companies whose market capitalization is less than 5000 crores

Dividends : company’s profits paid out to shareholders (investors) on a quarterly or annual basis. It is not compulsory for a company to declare dividends despite making good profits

Mutual fund: a collection of stocks, bonds, options or commodities as one fund, within or across investment choices. It is usually maintained by an investment company on behalf of investors for a commission/fee (expense ratio of the fund)

P/E Ratio: A stock’s price divided by its earnings per share, which indicates how much investors are paying for a company’s earning power. In other words, if a company reports a profit of 5rs per share, and the stock is selling for 50rs per share, the P/E ratio is 10 because you are paying ten times its earnings

Ask: lowest price a seller accepts when selling a stock of a company

Bid: maximum price a buyer accepts when purchasing a a stock of a company

Stockbroker/Broker: an intermediate person that buys or sells an investment for you for a commission

Bull market: period where most stock prices are increasing over several months.

Bear market: period where most stock prices are decreasing over several months.

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