Learning Some Financial Terms

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Escrow funds

So-called managed funds or mutual funds are an excellent way for ordinary people to enter the stock market. When you invest your funds in a specific fund, your funds will be combined with other investors who could not directly invest in the stock market. These funds need to pay to pay for the service fees of fund managers.
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diversification

This is to spread the risk and not when spreading money when putting too many eggs in a few baskets. During the 2008 global financial crisis, there was a story telling the story of investors losing all their life insurance savings when a financial company went bankrupt. These people invest all their funds in one company instead of spreading funds across different assets and investment types. This is called diversification.
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volatility

Volatility refers to the ups and downs of the market; it also applies to investing in gold and cryptocurrencies.
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Experienced investors know that the market may fluctuate during periods of uncertainty. During this time, investors need to establish the right mindset, because the market will let even the most savvy investors ride on the roller coaster.
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Risk profile

This relates to the risk you are willing to take before you start to feel nervous about investing. When the market rises, it is easy to become an investor in a growth fund, but as experienced investors know, the stock market is unstable, so you must invest according to the amount of volatility you can withstand.

Averaging
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Averaging is a strategy where you can buy a small number of shares on a regular basis instead of buying them all at once. This can be done using internet trading applications. The advantage is that as stock prices rise and fall, you have at least bought some stocks at lower prices. Find the average amount you paid for shares, add the total amount paid for shares, and divide that number by the total number of transactions. This will give you the average per share amount. The average can also be used to buy Bitcoin.

dividend

The company pays dividends to shareholders. Dividends come from the company’s profits. Many investors like to reinvest any money received from dividends. Others like to use it as income. It all depends on whether people invest for income or long-term capital gains.

assets

Assets are things that can bring you income.Examples of assets are interest-bearing accounts, stocks, joint/managed funds, property, etc.

Debt

Debt is something that costs money. If you want to pay off debts, this is a responsibility. At HP, you are responsible for items purchased by credit cards or financial companies because they make you spend money. Smart money managers have almost no debt because they know that the interest payable on borrowing is “dead money” because they have not received any tangible money.

Capital gains

Captain income is an increase in the value of an investment, whether it is a stock, a joint/managed fund, real estate, gold or cryptocurrency.

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