Glossary

  • ETF : Exchange Traded Fund. Like a mutual fund, this investment product lets you own a share of many different companies, often organized by a specific investment category (e.g. natural resources). Unlike a mutual fund, an ETF is traded like a regular stock throughout the trading day.
  • Mutual Fund : An investment product that pools money from many investors to buy shares in a number of companies. Offers the individual investor the opportunity to own a stake in many different companies. Managed by professional fund managers to [hopefully] make wise investing decisions.
  • IRA : Individual Retirement Account. A special type of investing account with specific tax advantages. As the name implies, this is meant for retirement and carries penalties if used before retirement age.
  • Roth IRA : One type of IRA very popular with vicenarians. Allows tax-free investing for retirement. Can also be used to purchase your first home.
    • Stock : An investment product that allows you to own a share in a company. Companies often pay stock holders a percentage of profits in the form of dividends. The value of a stock is a representation of the future value of a company.
    • Dividend : A payment made to stock holders by a company.
    • EPS : Earnings per Share. A measure of a companies total earnings divided by the number of shares of stock
      issued. Often used as a measure of a company’s financial performance.
    • P/E Ratio : Price/Earnings Ratio. The EPS divided by the share price for a given stock. Often used as a measure to compare the price of a stock relative to another company in the same industry.
    • PEG Ratio : Price to Earnings Growth Ratio. The P/E divided by % annual revenue growth for a given company. Often used as a measure of the present value of a stock compared to future expected return.

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