12 terms every investor should know


The principle of compounding is one of the most important concepts in finance

Investors can choose from countless assets including stocks, bonds, real estate, commodities, cryptocurrencies and so on


Perhaps one of the most important and underappreciated concepts in finance is the concept of opportunity cost

Opportunity cost

One of the most commonly used investment metrics in the stock market is the price-to-earnings ratio, or P/E

Price-earnings ratio

Exchange-traded fund 

An exchange-traded fund, or ETF, is an exchange-traded financial product that has a portfolio of securities

Another investment metric, the debt-to-equity ratio, is measured by dividing a company's debt by its equity value

Debt-to-equity ratio

Beta is a measure of how volatile a stock is compared to the stock market as a whole


Interest is the fee charged to the borrower for taking out the loan

Interest rate

The US Federal Reserve is in charge of monetary policy

Federal Reserve Bank

An index fund is an ETF or mutual fund that tracks the performance of a specific market index

Index fund