The 5 Investing Terms Everybody Should Know
You might think investing is only for moneybags who wear pinstripe suits. But contrary to what Hollywood might make you believe, investing is something ordinary people do, too. In fact, if you have a super account, you’ve got investments – which means you should know a thing or two about what that means.
Another good reason to know a little about investing? You might one day avoid hearing nails on a chalkboard, like one unlucky fella does in this video.
Stocks or shares?
Trick question – they’re the same thing! A stock or a share is essentially part-ownership of a company. If you own a stock you get to vote in shareholder meetings and receive dividends (which we’ll explain next).
A dividend is a sum of money paid by a company to shareholders. It’s basically a distribution of profits that happens on a regular basis.
The ASX is the Australian Stock Exchange – our local sharemarket.
A bull market is one where share prices are rising. Usually it’s a time of investor “confidence”, or optimism that the good times will continue. There’s also the term “bear markets”, which is when prices are falling.
ETF is short for exchange traded fund. They’re like shares, but instead of investing in a particular company, your ETF follows an entire market. So for instance, you could buy an ETF that follows the ASX, and its performance will generally be in line with the entire stock market.
Always read the product disclosure statements before acquiring or holding a product and ensure it is appropriate to your circumstances.