Finance, saving

Investment terms and their definition

Just like in every profession there are terms and conditions that an individual have to understand prior to making a decision. Some terms might be easier to understand  while  others  might take longer. Before making any decisions mean you’ll need some sort of understanding before understanding the full benefits of them. If you just getting into investing it’s important for you to review, research, and ask alot of questions. While in the process you might find yourselves understanding some of the aspects of investing but not all of it and that is perfectly okay because the world wasn’t made in one day.

Start the process small and steady. Let’s start with my favorite, all my investments is base on Dividend. Dividend is a distribution by a corporation. When the company makes a profits or a surplus a proportion of that is divided with the shareholders. Owning shares in a corporation really makes you part owner of that business. When they do well you get rewarded some company will go the extra mile just like Costco did these year distribute extra money because of a surplus. Dividends can be paid once, as a special use of them, or they can be paid more regularly, such as monthly, quarterly, semi-annually, or annually.

Portfolio is a collection of financial Investments
It can be stocks, cash,bond commodity and real estate, Arts and ETF (extend traded funds).
If you are talking to people who are using that term your circle is good. I’m always curious to see what’s in other people portfolio.

Asset / allocation: An asset is a resource or property having a monetary/economic value possessed by an individual or entity, which is capable to generate some future economic benefit. No matter how aggressive you are it’s always good to diversify your portfolio holding by allocating them to do so you divide them by classes to limit risk because some asset perform opposite to each other. For example we have technologies, pharmaceuticals, consumer staples and utilities just to name a few.

Don’t ever think of your car as an asset
It’s a liability it devalue daily and cost to maintain.
Bear market: is a market that is falling. A bear market has a downward trend, and someone who believes the market is headed for a drop
Represent by a red color and a bear.

Bull market: a bull market is a condition of a financial market in which price are rising or expected to rise usually represent by the color green and a bull.

Capital gain (or loss): is the difference between what you bought an investment for and what you sell if for. If you buy 100 shares of a stock at $10 a share (spending $1,000) and sell your shares later for $25 a share ($2,500), you have a capital gain of $1,500. A loss occurs when you sell for less than you paid. So, if you sell this stock for $5 instead ($500), you have a capital loss of $500).

Blue chip: You might hear reporters and others refer to “blue-chip stocks.” Blue chips are companies that have a long history of good earnings, good balance sheets, and even regularly increasing dividends. These are solid companies that may not be exciting, but they are likely to provide reasonable returns over time.

Those are just a few of the market terminologies
No need to learn them by heart. You can just look them up whenever but they are very important.

What is risk tolerance?
Is your ability to psychologically endure the potential of losing money on an investment.
All investment carry some type of risk while some can be riskier.

What are the best stock a bigginner investor should buy? That question do not have a straight forward answer as not all investors have the same goals nor same risk tolerance.

How do I become a successful investor?
Start with a plan, diversify, stick with your plan regardless of volatility. Focus on generating after tax returns.