Finance can be intimidating due to complex terminology. Let’s simplify it:
- Stocks: Owning a share in a company. Stocks represent ownership and can appreciate or depreciate in value.
- Bonds: Debt securities issued by governments or corporations. Investors receive interest payments.
- Derivatives: Financial contracts based on underlying assets (options, futures, swaps).
- Credit Score: A numerical representation of creditworthiness. Higher scores indicate better credit health.
- Investment Horizon: The time frame for holding investments. Short-term vs. long-term strategies.