Are you a new investor? Then you’re not expected to make investment decisions like professionals. Lack of confidence boosting knowledge of financial terms is going to get in the way of making informed investment decisions.

It’s important to overcome this ‘handicap’ by learning meanings and applications of key financial terms.


47 Financial terms and their meanings.

Annual report .

This is the yearly audited record of a company that is distributed to shareholders. The yearly audited report shows the company’s performance and condition.


2. Appreciation.


This the increase in the value of a non-physical, liquid asset known as financial asset. Examples of a financial asset are cash, bank deposits, stocks, mutual funds and bonds.


3. Asset allocation


Asset allocation is the practice of dividing investments among different assets such as bonds and stocks. This diversification is done to minimize risk and maximize returns on investment.
4. Average maturity.


A bond has a maturity date when the principal amount falls due for repayment. A portfolio may have bonds with different maturity periods. Average maturity is the weighted average of maturities of bonds held in a portfolio.


5. Balanced fund/Blended fund.


This is a type of mutual fund that is a combination of both stocks and bonds. A balanced fund is used by investors to achieve diversification for their long term investments.


6. Bear market.


A bear market is when the market is down twenty percent or more for at least a period of two months. Bears often occur when investors choose to sell rather than buy. They often do this in periods of economic slowdown.

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