Financial Literacy
Financial literacy is the ability to use monetary knowledge to acquire and communicate meaning in all aspects of economic life.
Financial Planning
Financial planning is a process that defines one’s economic goals and develops strategies to achieve them.
Financial Services
Financial services are a category of businesses that serves the finance industry. This sector includes banks, credit unions, accounting firms, brokerage companies, insurance agencies, and mutual funds.
Know Your Customer (KYC)
“Know Your Customer” is a New York Stock Exchange rule. KYC requires member firms to obtain essential background information about their clients. Prior to opening an account, broker-dealers must verify each customers’ investment knowledge, risk tolerance, and financial profile.
Market
A market is a place where competing parties meet to buy and sell goods and services. In finance, the market usually refers to an exchange or over-the-counter facility for the trading of securities. For example, the stock market is a place where brokers gather to buy and sell equities and other instruments.
Open-End Fund
An open-end fund is an investment company that can issue an unlimited number of shares. As per its name, this vehicle is open and liquid. Therefore, investors can can buy or sell their units at any time based on net asset value. Most mutual funds are open end, as are hedge funds and exchange-traded funds.
Personal Finance
Personal Finance is the process of evaluating, planning, and managing a household’s monetary needs, goals, strategies, and activities. The discipline covers budgeting, saving, credit, and debt. It further encompasses education, insurance, investment, tax, retirement, and estate planning. The term often refers to the segment of the financial services industry that advises individuals and families.
Rebalancing
The process of realigning the weightings of different types of securities in an investment portfolio. Rebalancing involves systematically buying and selling securities to maintain the portfolio's optimum asset allocation percentages and risk levels.
Risk Tolerance
Risk tolerance refers to an investor’s willingness to lose principal in exchange for potentially greater return. Intrinsically, risk tolerance is subjective. Thus, it varies according to a number of factors—like age, affluence, and sophistication. For example, the younger, wealthier, and savvier the investor, the higher is their tolerance for risk. As such, an aggressive investor with high risk tolerance may prefer small-company stocks, emerging market equities, and gold. By contrast, a conservative investor with low risk tolerance might opt for money-market funds, certificates of deposit, and Treasuries.
Stock
A stock (or an equity) is a financial security that grants the investor a share of ownership in a company. As a result, the individual owners have claims to the company’s assets and earnings proportionate to their number of shares. In addition, these shareholders have a right to vote for the board of directors.