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An investment type which does not fall into shares or bonds, such as property and commodities.
A collective term for investments with similar traits. Examples can include shares, bonds, property, cash and alternatives.
When inflationary changes are caused considerably more by how prices behaved in the previous year, rather than it being particularly due to what is happening now.
100 basis points, or bps, is equal to 1%. For example, 25 bps is equal to 0.25%.
Occurs when an investment market experiences prolonged price declines, typically 20% or more, often accompanied by negative investor sentiment and declining economic prospects.
These are a type of loan to a government or company over a fixed period which usually pays out a fixed amount of interest, known as a coupon.
Occurs when an investment market experiences prolonged price increases, typically 20% or more, often accompanied by positive investor sentiment and increasing economic prospects.
Typically, this refers to cash in hand (coins and notes), however the term can also be used to indicate cash that is held on deposit in bank or building society accounts.
A financial institution who is responsible for implementing monetary policy, managing the currency of a country, or group of countries, and controlling the money supply.
A raw material or product that holds a market value and can be traded on an exchange. Examples include precious metals such as gold and energy resources such as oil.
Inflation, without volatile components such as energy and food.
The compensation investors receive for taking on credit risk.
A stock price that is more sensitive to changes in the business cycle.
A stock that provides relatively more consistent and stable earnings in a market slowdown.
A measurement of the fall in price of selected goods and services in an economy over a period of time. Deflation occurs when the inflation rate falls below 0%.
A country that tends to be industrialised, further advanced economically and technologically, and have a high gross domestic product per capita.
A risk management strategy that utilises a mix of various investments within a portfolio, by spreading and investing across different asset classes, sectors, geographical regions and the investment style of the funds.
A sum of money paid regularly by a company to its shareholders out of its profits.
Refers to the tone of language used by policymakers to describe a situation and the implications of actions. For example, if a central bank refers to inflation in a dovish tone, it is unlikely that they will take aggressive actions.
A profit per share that a company earns, which indicates how profitable that company is.
Economic cycles are part of the normal ups and downs of investing. Typically, an economic cycle has four main stages: peak, recession (when the economy is going through a downturn), trough and expansion (when the economy starts to grow again).
Countries with generally lower per capita gross domestic product which may be going through the process of industrialisation.
A pooled investment security that invests in a basket of stocks, bonds or other assets, purchased or sold on a stock exchange.
Collective term used when referring to the taxing and spending actions of governments.
Debt instruments issued by governments to support their government’s spending and obligations.
Measures the total value of all the goods produced and services provided within a country during a specific time period.
Companies that are growing their revenue, profits and/or cash flow at significantly faster rates than the overall stock market.
It refers to the tone of language used by policymakers to describe a situation and the implications for actions. For example, if a central bank refers to inflation in a hawkish tone, it is likely that they will take aggressive actions by increasing interest rates and/or controlling the supply of money into the economy.
A corporate bond that is issued by companies. These bonds have lower credit ratings than investment grade bonds (the other main type of corporate bonds) and hence have a higher risk of default. To compensate investors for taking this added risk, the yield on these bonds is higher.
A way of tracking the overall performance of similar types of individual investments. For example, the FTSE 100 index tracks the performance of UK shares in the 100 largest companies by market value on the London Stock Exchange.
A measurement of the rise in price of selected goods and services in an economy over a period of time, which therefore indicates the loss in the purchasing power of money.
An inverted yield curve results from long-term interest rates being less than short-term interest rates.
Bonds that are believed to have a low to medium credit risk and receive higher ratings by the credit rating agencies.
This indicates the ease with which an asset can be sold and converted into readily available cash without a drastic change in its market price.
The total market value of a company, calculated by multiplying the current share price by the number of shares owned by investors.
Indicates how quickly an investment can be sold without impacting price.
Monetary policy is a set of actions that central banks can take to influence how much money is in a country’s economy and how much it costs to borrow.
A company’s total assets minus liabilities.
The difference between the amount of interest banks are making on loans and paying on deposits.
A collection of investments all owned by the same individual or organisation and are managed together to meet a particular investment objective.
Property investment refers to land, buildings or both, also known as real estate, purchased with the intention of earning a return on the investment either through rental income, the future resale of those assets or both.
A tool used when a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity.
A tool applied by central banks to decrease the amount of liquidity or money supply in the economy.
A rally refers to a period of continuous increase in the prices of stocks, indexes or bonds.
This means the interest rate has been adjusted for inflation.
The percentage of a commercial bank’s deposits that it must keep in cash as a reserve in case of mass customer withdrawals.
An investment setting in which investors become increasingly cautious and look to lower exposure to potential losses.
A particular industry or area of the economy which you can invest in.
In investing terms, this is a share of ownership in a company.
Equivalent to a ‘Goldilocks’ scenario which occurs when central banks tighten monetary policy to fight inflation, but minimise or avoid a recession.
An economic situation where prices do not adjust quickly to changes in supply and demand, leading to persistent inflation.
Companies which are generally not expected to grow very fast but are trading at a low price to cash flow, price to sales and price to profits (earnings per share).
A measure of the fluctuation of returns for a given investment or market index, over a certain time period. Higher volatility is typically an indication of higher risk.
A monetary policy action which sees a central bank purchase variable amounts of government bonds or other financial assets in order to target interest rates at a certain level.
This is a return measure for an investment’s earnings over a set period of time. It is calculated by the dividend per share divided by the share price, and is usually expressed as a percentage.
An investment type which does not fall into shares or bonds, such as property and commodities.
A collective term for investments with similar traits. Examples can include shares, bonds, property, cash and alternatives.
When inflationary changes are caused considerably more by how prices behaved in the previous year, rather than it being particularly due to what is happening now.
100 basis points, or bps, is equal to 1%. For example, 25 bps is equal to 0.25%.
Occurs when an investment market experiences prolonged price declines, typically 20% or more, often accompanied by negative investor sentiment and declining economic prospects.
These are a type of loan to a government or company over a fixed period which usually pays out a fixed amount of interest, known as a coupon.
Occurs when an investment market experiences prolonged price increases, typically 20% or more, often accompanied by positive investor sentiment and increasing economic prospects.
Typically, this refers to cash in hand (coins and notes), however the term can also be used to indicate cash that is held on deposit in bank or building society accounts.
A financial institution who is responsible for implementing monetary policy, managing the currency of a country, or group of countries, and controlling the money supply.
A raw material or product that holds a market value and can be traded on an exchange. Examples include precious metals such as gold and energy resources such as oil.
Inflation, without volatile components such as energy and food.
The compensation investors receive for taking on credit risk.
A stock price that is more sensitive to changes in the business cycle.
A stock that provides relatively more consistent and stable earnings in a market slowdown.
A measurement of the fall in price of selected goods and services in an economy over a period of time. Deflation occurs when the inflation rate falls below 0%.
A country that tends to be industrialised, further advanced economically and technologically, and have a high gross domestic product per capita.
A risk management strategy that utilises a mix of various investments within a portfolio, by spreading and investing across different asset classes, sectors, geographical regions and the investment style of the funds.
A sum of money paid regularly by a company to its shareholders out of its profits.
Refers to the tone of language used by policymakers to describe a situation and the implications of actions. For example, if a central bank refers to inflation in a dovish tone, it is unlikely that they will take aggressive actions.
A profit per share that a company earns, which indicates how profitable that company is.
Economic cycles are part of the normal ups and downs of investing. Typically, an economic cycle has four main stages: peak, recession (when the economy is going through a downturn), trough and expansion (when the economy starts to grow again).
Countries with generally lower per capita gross domestic product which may be going through the process of industrialisation.
A pooled investment security that invests in a basket of stocks, bonds or other assets, purchased or sold on a stock exchange.
Collective term used when referring to the taxing and spending actions of governments.
Debt instruments issued by governments to support their government’s spending and obligations.
Measures the total value of all the goods produced and services provided within a country during a specific time period.
Companies that are growing their revenue, profits and/or cash flow at significantly faster rates than the overall stock market.
It refers to the tone of language used by policymakers to describe a situation and the implications for actions. For example, if a central bank refers to inflation in a hawkish tone, it is likely that they will take aggressive actions by increasing interest rates and/or controlling the supply of money into the economy.
A corporate bond that is issued by companies. These bonds have lower credit ratings than investment grade bonds (the other main type of corporate bonds) and hence have a higher risk of default. To compensate investors for taking this added risk, the yield on these bonds is higher.
A way of tracking the overall performance of similar types of individual investments. For example, the FTSE 100 index tracks the performance of UK shares in the 100 largest companies by market value on the London Stock Exchange.
A measurement of the rise in price of selected goods and services in an economy over a period of time, which therefore indicates the loss in the purchasing power of money.
An inverted yield curve results from long-term interest rates being less than short-term interest rates.
Bonds that are believed to have a low to medium credit risk and receive higher ratings by the credit rating agencies.
This indicates the ease with which an asset can be sold and converted into readily available cash without a drastic change in its market price.
The total market value of a company, calculated by multiplying the current share price by the number of shares owned by investors.
Indicates how quickly an investment can be sold without impacting price.
Monetary policy is a set of actions that central banks can take to influence how much money is in a country’s economy and how much it costs to borrow.
A company’s total assets minus liabilities.
The difference between the amount of interest banks are making on loans and paying on deposits.
A collection of investments all owned by the same individual or organisation and are managed together to meet a particular investment objective.
Property investment refers to land, buildings or both, also known as real estate, purchased with the intention of earning a return on the investment either through rental income, the future resale of those assets or both.
A tool used when a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity.
A tool applied by central banks to decrease the amount of liquidity or money supply in the economy.
A rally refers to a period of continuous increase in the prices of stocks, indexes or bonds.
This means the interest rate has been adjusted for inflation.
The percentage of a commercial bank’s deposits that it must keep in cash as a reserve in case of mass customer withdrawals.
An investment setting in which investors become increasingly cautious and look to lower exposure to potential losses.
A particular industry or area of the economy which you can invest in.
In investing terms, this is a share of ownership in a company.
Equivalent to a ‘Goldilocks’ scenario which occurs when central banks tighten monetary policy to fight inflation, but minimise or avoid a recession.
An economic situation where prices do not adjust quickly to changes in supply and demand, leading to persistent inflation.
Companies which are generally not expected to grow very fast but are trading at a low price to cash flow, price to sales and price to profits (earnings per share).
A measure of the fluctuation of returns for a given investment or market index, over a certain time period. Higher volatility is typically an indication of higher risk.
A monetary policy action which sees a central bank purchase variable amounts of government bonds or other financial assets in order to target interest rates at a certain level.
This is a return measure for an investment’s earnings over a set period of time. It is calculated by the dividend per share divided by the share price, and is usually expressed as a percentage.
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