COMMON INVESTMENT TERMS EXPLAINED: Part 1

Financial terms can be intimidating! The financial industry sometimes seems to have its own language, designed to keep the average person confused. But if you can learn to understand the terminology, you’ll gain the confidence you need to make good, informed decisions with your money.

In this blog series, you’ll find some of the most common financial terms and acronyms used in the world of banking, mutual funds, stocks, and real estate transactions.

Keep our blog handy as you explore the world of investing, and feel free to give us a shout if you have questions about any of these terms. Let’s dive right in with some important terms that relate to mutual funds.

MUTUAL FUND TERMS

Closed-End Fund: A type of fund which issues a finite number of shares that trade throughout the day on stock exchanges at market-determined prices. Investors in a closed-end fund can buy or sell shares through a broker or online. Using this kind of fund is no different than buying and selling stock shares of any publicly traded company.

Diversification: Investing broadly across a number of different securities, industries, or asset classes to reduce risk. This is a principal advantage of investing in mutual funds.

Dollar-Cost Averaging: The practice of investing a fixed amount of money on a regular basis. This strategy results in buying more shares of a mutual fund when the price is lower and buying fewer shares when the price is higher, which lowers the average price paid for the fund shares. Also, this popular investment strategy promotes regular and consistent investing.

Thanks for reading! We’ll be back with more common investment terms explained over the next few weeks. As always, reach out to us if you want to chat about your investing journey.