A Beginners Guide To Investment Jargon

There are few times in life when you feel more helpless than when you’re in a foreign country and can’t speak a word of the language. You simply don’t know what to do. It can be enough to put some people off going abroad altogether and that’s because communication is a vital part of our lives.

Letters flying out of a book

It’s not just foreign travel that can leave us tongue-tied though. The world of investment, like many areas of business, comes with its own set of words and terms that can be very daunting to the uninitiated. If you are looking for more information on investments then CSS Partners, an established financial investment company, is a great place to start.

To give you a basic overview on some of the terminology you may encounter after making your enquiries, here is a brief beginners’ guide to investment jargon but you can also check out fantastic online investment dictionaries for a more comprehensive explanation of terms.

Jargon: Bid rate

Definition: This is the interest rate bid by an investment provider for a product in an investment auction. In other words it represents the amount of interest they will be happy to pay.

Jargon: Liquidity 

Definition: Liquidity is a measure of how easily you can get out of an investment and get your funds back.

Jargon: Foreclosure investing

Definition: This is the process of investing cash or capital into the sale of a mortgaged property. It occurs after the foreclosure of a loan secured using that property, hence the name, and our post on the three entry points for foreclosure investing can offer more information.

Jargon: Fallout risk 

Definition: No business venture or financial process is without its risk and in investments you’re likely to come across the term fallout risk. This represents the lending risk you’ll face from your investment decisions. An example would be when dealing with a mortgaged property. As the terms of this agreement are not finalised until the sale has been completed, investors are at risk of their transaction not being completed and this is the fallout risk.

Jargon: Mergers and acquisitions

Definition: This is a general phrase used to explain the consolidation of companies into a single body but there is some differentiation between the two terms. Technically speaking, a merger is where two companies combine together to form a new business while an acquisition is the purchase of one company or firm by another. In an acquisition, there is no new business formed.

Jargon: Capital

Definition: To make an investment you need capital – but just what is it? According to definitions, capital is simply a term used to refer to financial assets which may include cash, properties, equipment or other business possessions.

Jargon: Insolvency

Definition: Representing the other side of the coin when it comes to investment, insolvency is used to refer to the state an individual or business faces when they can no longer meet their financial commitments. This can lead to insolvency proceedings where legal action can decide to liquidise assets to pay outstanding debts.

Jargon: Learn the language

Definition: If you’re looking to find out more about investments and the jargon used why not check out CSS Partners, experts in the field and qualified to give you all the right information about investing? Once you’ve learned the language of investing, you will never feel powerless again.

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