Key Terms - A Glossary
For the technical ones - here is a compendium of all jargons thrown at us.
Glossary of Terms:
1. Risk: A risk is a potential or inherent financial loss that can be incurred in an investment.
2. Debt: An acknowledgement of borrowing with a promise of repayment. Thus debt investments are money given to institutions like banks, companies, etc. on which the institution pays back some form of return (usually fixed returns).
3. Capital: Wealth in the form of money or other assets that is owned by an individual or company for business purposes.
4. Shareholder: A type of investor that invests money into providing capital to a company and thus has a financial interest in the company. A share is one equal part of a company’s capital that gives the holder a proportionate right to the profits made by the company.
5. Equity: Capital received by a company on the sale of its shares to different individuals and organisations.
6. Mutual Funds: Pool of funds contributed to by various investors, managed by professional money managers that try to generate income for investors in exchange for a fee.
7. Fixed deposit: Money deposited in a lumpsum on which interest is to be paid to the holder at a fixed rate. The principal amount with interest is repaid on the fixed maturity date (usually after some years or one year)
8. Alternative Assets : Investments in income generating tools that are not money. Investing money in real estate ( buying property for renting, resale etc ) , high value paintings for resale or auction and other such investments. These have unpredictable liquidity and fluctuating values, thus determining value of holdings can be difficult.
9. Liquidity: The ease with which an asset can be converted into cash in hand.
10. Credit Cards: Card issued by a bank which allows the borrower to use payment facilities as a debtor to the bank. The user has to pay a charge to obtain the card and has to make subsequent repayment of money which has been used by them.
11. Debit Cards: Card issued by a bank which allows the user to use money upto amount pre-deposited with the bank. A charge is to be paid to acquire the card.
