Investing 101: Jargon Buster
New to investing? Jargon and confusing terms can put you off getting stuck in with investing, but it’s not as complicated as you may think.
Here are some common terms and jargon that you may have seen often but not known exactly what they mean.
Mutual funds are funds that are made up from a pool of money brought together from multiple investors. This pool is used to purchase bonds, stocks and other assets. These types of funds are managed professionally.
Stocks are a share in a company. The value of these shares goes up and down, depending on the financial situation of the company.
ETF stands for Exchange Traded Fund, and is a stock, fund or bond that tracks an index. An ETF trades like a common stock, and can experience price changes throughout the day.
Bonds are fixed investments in companies. Essentially, this means that you will loan the company a certain amount which they will pay back over time with interest.
Active funds are those that are managed professionally, who themselves actively work to outperform common benchmarks.
These types of portfolios are actively assessed to capitalise on fluctuating prices and include a wider variety of investments.
Passive funds usually come with lower fees, as they involve less management. These types of funds tend to mirror a market index.
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