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Invest Glossary
Plain-English definitions of investing and stock-market terms — read one, and you will understand it for good. Built by an independent investor for anyone who wants the honest, jargon-free answer, whether you are buying your first fund or managing a portfolio for years.
InvestGlossary is an independent, ad-supported reference built for one reader: the person who hears a financial term and wants a clear, honest answer in plain English. Every entry opens with a one-sentence definition, then walks through the formula, a worked example with real numbers, the common misunderstandings, and how investors actually use the idea in practice. No jargon for its own sake, no sales pitch — just definitions written by an independent investor and reviewed before publication. The site is organised into five topic areas — valuation, funds, bonds, trading, and risk — so related ideas sit next to each other and build on what you already know, and the A–Z index lets you jump straight to any term by its first letter. New terms are added over time, and each addition follows the same structure: a definition you can act on, numbers you can check, and the mistakes people make. If a concept is missing, send us a note and we will add it.
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Valuation multiples, profitability, and financial ratios
Stock Value
28 termsP/E Ratio (Price-to-Earnings)
The P/E ratio tells you how much investors pay for each dollar a company earns. A higher P/E means the market expects…
EPS (Earnings Per Share)
EPS shows how much profit a company made for each share you own. It is net income divided by the number of shares out…
PEG Ratio
PEG adjusts the P/E ratio for expected earnings growth, so a stock’s price looks fairer once growth is considered.
Market Capitalization
Market cap is the total value of a company’s shares: its share price multiplied by the number of shares outstanding.
Index funds, ETFs, sectors, and portfolio structure
Funds & ETFs
17 termsETF (Exchange-Traded Fund)
An ETF is a basket of securities that trades on an exchange like a single stock, giving instant diversification.
Mutual Fund
A mutual fund pools investor money to buy a managed basket of securities, priced once daily after the market closes.
Index Fund
An index fund aims to match a market index’s return rather than beat it, by holding the same stocks in the same weights.
Expense Ratio
The expense ratio is the annual fee a fund charges, taken from your returns as a percentage.
Fixed income, yield curve, central-bank policy, and inflation
Bonds & Rates
16 termsBond Yield
Bond yield is the return an investor gets from a bond, usually as a percentage of its price.
Yield Curve
The yield curve plots bond yields across maturities; its slope signals growth and rate expectations.
Order types, derivatives, technicals, and IPOs
Trading & Markets
23 termsMarket Order
A market order buys or sells immediately at the best available price, with no price limit.
Limit Order
A limit order only executes at your specified price or better, protecting you from bad fills.
Options
Options are contracts giving the right, not the obligation, to buy or sell a stock at a set price before a date.
Volatility, drawdowns, rebalancing, and macro cycles
Portfolio & Risk
25 termsVolatility
Volatility is how much a price swings up and down over time, usually measured by standard deviation.
Beta (Stock Volatility vs Market)
Beta measures how much a stock tends to move compared with the overall market. 1.0 moves with the market; above 1 swi…
Sharpe Ratio
The Sharpe ratio measures excess return per unit of total risk, so you can compare funds on equal risk footing.
Drawdown
Drawdown is the peak-to-trough loss from a high point to the next low, a blunt measure of pain.