Glossary
Financial glossary
Short, clear explanations of investing terms — no jargon. Every term links to a calculator or article so you can go deeper.
Educational content, not investment advice.
What you already know
45 terms
- Risk
Altman Z″
An educational indicator of financial stability that folds several balance-sheet ratios into one number.
- Strategy
Asset allocation
How a portfolio is split across asset classes — stocks, bonds, cash, and property.
- Instruments
Bond
A debt instrument — you lend money to a government or company for interest and repayment at maturity.
- Basics
Brokerage account
An account with a broker through which you buy and hold stocks, ETFs, and other instruments.
- Basics
Bull and bear market
A bull market is a sustained rise in prices; a bear market a sustained fall, usually 20% or more from the peak.
- Taxes (BG)
Capital gains tax
A tax on the profit from selling an asset for more than you paid for it.
- Metrics
Compound annual growth rate (CAGR)
The steady yearly rate at which an investment would grow from its start value to its end value.
- Basics
Compound interest
Interest calculated on both your original principal and the interest it has already earned.
- Risk
Correlation
How closely two assets move together — from +1 (in step) through 0 (independent) to −1 (opposite).
- Instruments
Cryptocurrency
A digital asset built on blockchain technology, such as Bitcoin — highly volatile and speculative.
- Metrics
Dickinson phase
A firm life-cycle phase determined from the signs of its three cash flows.
- Risk
Diversification
Spreading investments across different assets so the outcome does not hinge on any single one.
- Instruments
Dividend
A share of profit that a company distributes to its shareholders, usually in cash.
- Taxes (BG)
Dividend tax
A tax on the dividends you receive — in Bulgaria a final rate of 5%.
- Metrics
Dividend yield
The annual dividend expressed as a percentage of the share price.
- Strategy
Dollar-cost averaging (DCA)
Investing a fixed amount at regular intervals, regardless of the price.
- Risk
Drawdown
The decline from an investment's peak to its trough before a new recovery.
- Metrics
Earned vs contributed capital (RE/TE)
The share of equity that came from accumulated profit rather than owner contributions.
- Metrics
Earnings per share (EPS)
A company's net profit divided by its number of shares.
- Strategy
Emergency fund
An easily accessible reserve of 3–6 months of expenses that keeps you from selling investments in a crisis.
- Instruments
ETF
An exchange-traded fund — a basket of many assets that trades like a single stock.
- Strategy
FIRE (financial independence)
Building enough capital that it covers your expenses without needing a salary.
- Strategy
Firm life cycle
The stages a company passes through — from introduction through growth and maturity to decline.
- Psychology
FOMO (fear of missing out)
The fear of missing out on gains, which pushes people into impulsive buys at the top.
- Psychology
Herd behavior
The tendency to follow the crowd — buying because everyone buys, and panic-selling when everyone sells.
- Instruments
Index fund
A fund that passively tracks a market index instead of betting on stock picking.
- Basics
Inflation
The general rise in prices over time, which erodes the purchasing power of money.
- Basics
Liquidity
How quickly and easily an asset can be turned into cash without losing much value.
- Psychology
Loss aversion
The tendency to feel a loss about twice as strongly as an equal-sized gain.
- Metrics
Market capitalization
A company's total market value — its share price multiplied by the number of shares.
- Basics
Net worth
Everything you own minus everything you owe — a snapshot of your financial health.
- Metrics
P/E ratio
A share price divided by earnings per share — what you pay for one unit of annual profit.
- Strategy
Passive income
Income that arrives regularly without active work — such as dividends, interest, or rent.
- Metrics
PEG ratio
The P/E ratio adjusted for expected earnings growth — popularized by Peter Lynch.
- Basics
Real return
The return left after subtracting inflation — how much your purchasing power actually grew.
- Strategy
Rebalancing
Periodically returning a portfolio to its target allocation by selling and buying.
- Strategy
Reinvestment
Putting received dividends and interest back to work instead of spending them.
- Metrics
Return on investment (ROI)
The profit (or loss) from an investment as a percentage of the amount you put in.
- Risk
Risk tolerance
How much fluctuation and loss you can bear — financially and emotionally — without panic-selling.
- Risk
Sharpe ratio
A measure of return relative to the risk taken — how much return you earn per unit of volatility.
- Instruments
Stock
A share of ownership in a company — the holder takes part in its profits and growth.
- Basics
Stock market index
A measure that tracks the performance of a group of stocks — for example the S&P 500 or SOFIX.
- Metrics
Total expense ratio (TER)
A fund or ETF's total annual fee as a percentage of your investment — it quietly lowers returns.
- Metrics
Total return
The full return of an asset — its price change plus dividends and interest, usually reinvested.
- Risk
Volatility
A measure of how strongly and often an asset's price swings.