Nine basic investment terms to get you started

If you’re new to investing, unfamiliar terminology can be discouraging. There is an endless amount that you could learn about investing, but there are only a few things that you really ne​ed to know to get started. The basics come down to investment terminology. Once you’ve got a hold on the language, you’ll be ready to read, converse, and learn about investing.

Basic investing terms you need to know:

Stock

A stock is a security that signifies ownership in a company. This means that when you buy a stock, you’re essentially buying a piece of that company. That ownership represents a proportional share of a company’s assets and earnings. Also known as equity in a company, stocks are commonly bought and sold on stock exchanges.

Dividend

A dividend is a payment by a company to its stock-holding shareholders. The payment comes out of the company’s current or retained earnings.

Bond

A bond is a debt security used by governments and corporations to raise capital by borrowing. This concept is just the same as when you borrow money from a bank and pay the loan back with interest, but in this case you act as the bank. A bond is a promise to repay the principal along with interest on a specified date.

Mutual Fund

A mutual fund is a pool of money that is contributed by investors (like you) with similar investment objectives. This pool of money is professionally managed and invested on your behalf into securities like stocks and bonds. Investors in the mutual fund share the fund’s income, expenses, gains, and losses that the fund makes on its investments, in proportion to the number of units they own.

Portfolio

A portfolio is a collection of investments owned by an individual or organization. Your portfolio can be as simple as holding one investment or can be made up of many stocks, bonds, mutual funds, and other investments.

GIC

GIC is an acronym for Guaranteed Investment Certificate. Issued by financial institutions, it’s an investment that guarantees a rate of return over a fixed period of time.

TFSA

TFSA is an acronym for Tax-Free Savings Account. A TFSA is a Canadian investment account that provides certain tax benefits. This account has a wide array of uses.

RRSP

RRSP is an acronym for Registered Retirement Savings Plan. An RRSP is a Canadian investment account that provides certain tax benefits and is normally used to save for retirement.

RRIF

RRIF is an acronym for Registered Retirement Income Fund. A RRIF is a Canadian account that is funded by investments converted from an RRSP to provide an income in retirement years.

Investing doesn’t have to be as complicated as it seems. As you can tell, the key to learning about investing is knowing the terminology. Take the time to understand the basic language and you’ll be well on your way to becoming a seasoned investor. Use the basics to sort through the rest of the jargon and it’ll all begin to make sense.

If you’d like to speak with an ATB advisor about your options and what will work best for you, we’re here to help.