Multi-asset

You've got a lot to offer. Brains, brawn, beauty, and some people think you're pretty funny too. And these are just your best assets.

In this way, you're similar to a multi-asset class or fund, which is a combination or portfolio of asset classes (cash, shares, bonds etc) that increases the diversification (and prospective value) of your portfolio overall.

Micro-investing

Micro-investing is where you invest small amounts regularly, for example by using apps that "round up" your card payments to the nearest pound and invest the digital "change". The apps are normally a type of robo-adviser and tend to target young people who feel they don't earn enough to invest in funds or shares yet or don't know how to ...

Market capitalisation

Industry bods and CNBC commentators call it "market cap", perhaps because it sounds better or they don't have time to finish the word "capitalisation". Market capitalisation is the total market value of a company's outstanding shares ...

Liquidity

This is far simpler than it sounds: it's the ease with which you can buy or sell an investment or asset. Cash is about as liquid as you can get. The house or flat you own (or don't own) is about as illiquid as you can get, taking months to sell ...

Investment manager

If managing your own portfolio sounds like a drag, an investment manager will be happy to do it for you. For a percentage of the total value of your portfolio (or assets under management - AUM), they will make decisions based on the investment objectives and parameters you dictate ...

Investment bank

Unlike your normal commercial bank, investment banks do not accept deposits for current or savings accounts from us regular folk.

Instead, investment banks specialise in facilitating the purchase and sale of shares and bonds as well as helping companies list on stock markets known as "initial public offerings" ...

Interest rates

Just like it takes money to make money, it costs money to borrow money. It's the fee a lender charges a borrower for the use of assets. They are usually expressed as an annual percentage of the borrowed amount ...

Inflation

A penny sweet no longer costs 1p and a Freddo chocolate bar costs quite a bit more than 10p (the 1994 launch price), sadly. Why? As inflation increases, your money buys you less.

Inflation, which occurs when the price of products and services increases as the purchasing power of currency falls, is a thermometer economists often use to check an economy's temperature ...

Independent financial adviser (IFA)

Because they're the best partner you can have in planning for your financial future, think of an independent financial adviser (IFA) as your personal banking BFF.

An independent adviser can suggest products from across the board, hence the emphasis on the word ...

Hedge fund

Before we dive in, be warned: hedge funds are not the easiest point of entry if you're new to the world of investing. And if you're not already rolling in the dough, you're not likely to make it happen with the aid of a hedge fund. Hedge funds are alternative investments that are often for pro investors only, where institutions or individuals with significant assets (sometimes known as the limited partners) pool their money and go into partnership with a fund manager ...

Growth investing

Have you ever dated someone based on their future potential? Growth investing is similar(ish). You invest in companies whose earnings or profits are expected to grow at an above average rate ...

Fund of funds

It would be great if this was the collective name for funds (you know, like murder of crows). It's not. A fund of funds is exactly what it says: a fund that invests in other funds. They are also known as multi-manager funds. Their primary goal is to spread your money more widely - not putting all your eggs in one basket - while (hopefully) backing the best active fund managers ...

Mutual fund

For anyone who prefers to play their personal investment game on easy mode, mutual funds (US) and unit trusts (UK) are two different names for the same kind of low-effort investment funds. They take money from a large group of investors, and then typically invest it in a wide variety of stocks or bonds ...

Frontier markets

Also known as "pre-emerging markets", frontier markets are countries with investable, but less developed (read: more volatile), stock markets. Due to political instability, substandard financial reporting, and other inadequacies common in these markets, they are particularly attractive to investors looking for a high risk, high reward option to fuel their next adrenaline rush ...

Fixed income

The industry calls it fixed income; the rest of us say bonds. Bonds are effectively loans made by you, the investor, to a company or government. They promise to repay the exact investment back after an agreed period - five or ten years' time is common ...

Equities

"Equities" is a needless complication when you can use the word "shares". Fortunately, most people do say shares, or stocks. The equity refers to your ownership. If you've bought a few shares in Facebook, you actually own a very small amount of it, even if Mark Zuckerburg doesn't call you for advice ...

Earnings per share (EPS)

When it comes to humans, there are certain indicators that can communicate who among us are exceptionally wealthy. Lamborghinis, Burberry coats, and mansions, for example. When it comes to discerning a company's profitability, however, earnings per share (EPS) is one of the key indicators we can look to. To calculate EPS, the company subtracts the dividends they have paid for preferred stock from their net income, and then divide the figure by the average number of outstanding shares (which is always in flux) ...

Dividend

Did you know that you can get paid simply for owning a share of a company? If you weren't aware, it's time to get acquainted with dividends. These are regular (typically quarterly) payments that are distributed by a company (at its management's discretion) to its shareholders on a per share basis ...

Diversification

It is widely advised that you should never put all of your eggs in one basket. you know, because for some reason or another, having all of those eggs in one basket could lead to a total loss of all of your highly precious eggs. In line with this principle, many investors hold a bit of lots of different assets - shares, bonds, property, and so on ...

Crowdfunding

This is where a large number of people fund a company, often a start-up, through an online platform. Equity crowdfunding is where people invest in exchange for a share in the business (equity). The value of your shares could go up if the venture is successful or down if it is not. Investing in start-ups is particularly risky.