When you’re just getting started in investing, you might realize there are terms you’ve never heard before. Investing terminology can seem complicated at first, but don’t worry—after some time you’ll get the hang of it.
Here are a few common terms you should know:
Blue Chip—A blue chip company is a company that has a history of success in terms of its earnings and its low risk. Most beginning investors will start with blue chip companies.
Bears vs. Bulls—A bear believes the market or a particular stock will decline, whereas a bull believes the market or stock will increase in value.
Broker—This is the person who buys or sells stocks/bonds/etc. on your behalf. In exchange for this, you pay him or her.
Commission—What you pay your broker in exchange for his or her service.
Dow Jones Industrial Average—The Dow is the most used means of gauging the US stock market. It is based on a list of 30 blue-chip companies.
NASDAQ—One of the biggest stock exchanges that mostly concentrates on technology companies. One example is Microsoft.
Stock—If you hold stock in something, you are an owner of it. Businesses divide themselves up into stocks, and shares are sold to investors to help raise money.
Majority/minority owner— person who is a majority owner in a company holds a majority of that company’s shares. Conversely, a person who is a minority owner holds a minority of that company’s shares.
Do you have any other terms that often confuse you or that you think beginning investors should know?