Začínáme s investováním
Investment Glossary: 30 Terms You Need to Know
Key takeaways
- Most of investing rests on a few dozen terms you can pick up quickly.
- The glossary helps you read fund fact sheets, articles, and discussions without getting lost.
- Terms are grouped by area: instruments, funds, numbers, and strategy.
- You do not need to learn everything at once — come back here as a reference.
- Understanding the terms is the first step toward confident decision-making.
Investing sounds like a foreign language mainly because of jargon. The good news: a few dozen terms are enough to suddenly understand articles, fact sheets, and discussions. Here are the 30 most important ones, explained plainly in a single sentence each. Treat this as a reference you can return to.
Instruments
- Stock (Share) — a fractional ownership stake in a company.
- Bond — a loan to a government or company in exchange for interest (coupon).
- ETF — an exchange-traded fund, typically tracking an index.
- Mutual Fund — a basket of securities managed by a fund manager.
- Index — a basket of companies measuring market performance (e.g. S&P 500).
- Dividend — a portion of a company's profit distributed to shareholders.
Around Funds and Trading
- TER — total expense ratio; the annual cost of holding a fund, in percent.
- ISIN — international identification code for a security (Irish domicile starts with "IE").
- AUM — assets under management; the total amount a fund manages.
- UCITS — European fund regulation protecting retail investors.
- Accumulating (Acc) — fund reinvests dividends internally.
- Distributing (Dist) — fund pays dividends out to your account.
- Spread — the difference between the buy price and the sell price.
- Liquidity — how quickly you can sell at a fair price.
- Broker — the intermediary through whom you trade on the exchange.
Numbers and Valuation
- P/E — price-to-earnings ratio; share price divided by earnings per share.
- Market Capitalisation — the total market value of a company.
- Margin — how much of revenue remains as profit.
- Cash Flow — the actual movement of cash through a business.
- Return (p.a.) — the percentage gain over a year.
- Volatility — the degree to which a price fluctuates.
- Drawdown — the decline from a peak to the following trough.
Strategy and Risk
- Diversification — spreading risk across many assets.
- Asset Allocation — the ratio of stocks, bonds, and cash.
- Rebalancing — restoring portfolio weights to target levels.
- DCA — dollar-cost averaging; investing the same amount at regular intervals.
- Horizon — how long until you will need the money.
- Inflation — the gradual erosion of purchasing power.
- Compound Interest — returns earning further returns over time.
- Margin of Safety — a price cushion built in to allow for errors.
With these thirty terms you can read almost any investment article or fund fact sheet. When you are ready to put it into practice, continue with first steps and the ETF overview.
FAQ
How many terms do I actually need to know?
A few dozen core terms around instruments (stocks, ETFs, bonds), funds (TER, ISIN, accumulating/distributing), numbers (P/E, return, volatility), and strategy (diversification, rebalancing, DCA) are more than enough to start. With those you can read almost any article or fact sheet.
What is TER and why does it matter?
TER is the annual cost of holding a fund, expressed as a percentage. It matters because it is charged every year on the full amount and, through the compounding effect over decades, can eat a large share of returns. For broad indices, look for a low TER in tenths of a percent.
What is the difference between an accumulating and a distributing fund?
An accumulating (Acc) fund automatically reinvests dividends internally; a distributing (Dist) fund pays them out to your account. For the growth phase an accumulating fund is usually more advantageous; a distributing fund makes sense once you want regular income.
Do I have to learn all the terms at once?
No. Treat the glossary as a reference to consult whenever you encounter a term. After a few weeks of reading and practice the core terms will come naturally. More important than memorisation is investing regularly and learning as you go.