Financial Glossary

Understand how CAGR measures the smoothed annual growth rate of an investment over time.

Understand how compound interest lets your money grow on its own growth over time.

Understand how inflation raises prices over time and quietly reduces what your money can buy.

Understand how ROI measures the profit or loss of an investment relative to its cost.

Understand how total return captures both price gains and income like dividends.

Understand how annualized return turns a total gain into a comparable yearly rate.

Understand how real return shows your growth in purchasing power after inflation.

Understand the mental-math shortcut that estimates how long an investment takes to double.

Understand how investing a fixed amount on a regular schedule averages your purchase price over time.

Understand how dividing money across asset classes balances risk and return.

Understand why higher expected returns generally require accepting more risk.

Understand how spreading investments across assets reduces the risk of any single one.

Understand how correlation measures whether investments move together — and why that's the engine behind diversification.

Understand how volatility measures the size of an investment's ups and downs — and what it means for risk.

Understand how dividend yield measures the income an investment pays relative to its price.

Understand how reinvesting dividends buys more shares and compounds returns over time.

Understand how yield on cost measures today's dividend against the price you originally paid.

Understand how an ETF bundles many investments into one that trades like a stock.

Understand how an index fund tracks a whole market index at low cost, instead of trying to beat it.

Understand how XIRR measures the true annualized return when money goes in and out at irregular times.