To invest and succeed in the stock market, it’s essential to know the basics. Here are 10 terms you must know in order to understand and deal with the market.

  1. Asset Allocation – plan to balance risk and reward by splitting up a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.
  2. Bear Market – A trend of falling stock prices. This is the opposite of a bull market.
  3. Bull Market – A trend of increasing stock prices. Opposite of a bear market.
  4. Dollar-cost averaging – When an investor buys more shares of stock as the price goes down. This makes it so the average purchase price decreases.
  5. Dividend – A portion of a company’s earnings that is paid to its shareholders on a monthly, quarterly or annual basis.
  6. Initial Public Offering (IPO) – The first offering of a stock to the public by a company.
  7. Portfolio – Assortments of investments owned by an investor. A portfolio can contain only stock or infinite amounts.
  8. Sector – Group of stocks that are related in the products and services they provide. An example would be the Retail sector which includes a company like Amazon.
  9. Stock Symbol – One to five alphabetic symbols that represent a publically traded company. Amazon’s stock symbol is “AMZN”.
  10. Yield – The measure of the return on a stock from the payment of a dividend. This is obtained by dividing the annual dividend amount by the price paid for the stock. For example, if you bought XYZ stock for $60 a share and it pays annual dividend of $1.50, you’ll have a Yield of 2.5%

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