5 Investment Terms Every Beginner Must Know

Antara Bhattacharyya

Diversification : Spreading your investments across assets helps reduce risk, so a loss in one won’t ruin your entire portfolio.

Compound Interest : Interest earned on both your initial investment and the accumulated interest—this powerful concept helps your wealth grow over time.

Risk Tolerance : Your ability to handle investment losses. Knowing your risk tolerance helps you choose assets that match your financial comfort level.

Asset Allocation : Dividing your investments among different asset types like stocks, bonds, or cash based on goals, risk, and time horizon.

Liquidity : How quickly an investment can be converted into cash without losing value. High liquidity means faster access to your money.

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