The investment dictionary


Making the most of your money seems easy, but it is not. This vocabulary of the Bank of Spain and the CNMV can help you

Letter a

ACTION

Value that represents a proportional part of the social capital of a company. Who has shares is, therefore, a proprietary partner.

FINANCIAL ASSET

Value that certifies the ownership of certain economic rights (shares, deposits, fixed income securities …)

SAVING

The part of our income that we do not spend and that, therefore, we accumulate for the future. The difference between saving and investing is determined by the risk that is assumed. Saving does not imply any risk, while investing assumes a risk in order to obtain greater profitability.

Letter B

REAL ESTATE

Those that are subject to transaction in the real estate market (land, building sites, offices, homes, premises …). They have less liquidity than financial assets and are an investment alternative to them.

BOND

Value that represents a proportional part of a loan. The issuing company undertakes to repay the holders of the securities with an interest and to return the contributed capital.

Letter C

COMMISSION

Fixed or variable remuneration received by financial intermediaries for their services. Percentages are usually applied to the amount of the operation, always with a minimum.

COUPON

Nominal interest that holders of a fixed-income security have the right to receive. Usually paid annually.

Letter D

DEPOSIT

Amount of money deposited in the entities for their custody. The entity is obliged to return the same amount plus an interest.

DIVERSIFICATION OF RISK

Basic principle, which consists of distributing the investment between products with different profitability and different risk. Concentrating on a single type increases the danger of losses, because if that asset suffers there is no other that can compensate.

Letter F

TAXATION

It is the tax burden that is applied on savings or investment.

INVESTMENT FUND

Equity constituted by the contributions of multiple investors. A fund manager manages and represents the fund and is also responsible for investing these contributions in different assets.

Letter I

INTEREST

Amount paid as remuneration of a credit or a deposit. It can also be the retribution received for an investment. The interest is greater the longer the term in which the investment is made.

TO INVEST

To allocate savings to the purchase of movable or immovable property, or of financial assets, in order to obtain profitability from them.

Letter I

LIQUIDITY

It is the ease with which an asset (currency, securities, deposits, real estate) can be converted into money.

Letter O

OBLIGATION

Long-term fixed income securities issued by the State. At 10, 15 and 30 years. Throughout their life, these assets pay a fixed interest rate. The State agrees to return the money invested plus interest.

Letter p

PENSION PLAN

Financial product designed for savings through regular contributions, in order to obtain, normally at retirement, a benefit in the form of capital (a single payment) or in the form of income (in installments or other installments).

Letter R

PERFORMANCE

Result of an investment; the sum of the interest or dividends obtained, plus the revaluation or depreciation experienced by the price in the market.

FIXED RENT

Set of assets that represent the debt that entities have with investors. Fixed income consists of bonds, bonds, promissory notes, etc., which pay interest on the loaned capital. The interest can be fixed or variable.

VARIABLE INCOME

It is composed of actions, which represent the property of society. The profitability of the shares is not defined in advance, but depends on the progress of the company. That's why it's called variable income.

RISK

Measure of the uncertainty in the result of an investment. The more certainty exists about the result, the less risk the investment has.

Letter T

TYPE OF INTEREST

Price of money That is to say, the amount that the debtor must pay to the one who has lent him, for having the money for a certain period. That amount is set as a percentage of the amount of money borrowed.

Letter V

EXPIRATION

The date on which a financial contract expires, or in which the amount paid is returned to the investor when he purchased a fixed-income security.



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