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bobbrinker.com Investment Glossary

This glossary of investment and related terms provides simple definitions of terms that you may need to know.

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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

--- G ---

General obligation bond (GO):

A municipal bond backed by the full faith, credit, and "taxing power" of the issuing unit rather than the revenue from a given project.

GNMA (Ginnie Mae):

Fixed-income securities that represent an undivided interest in a pool of federally insured mortgages put together by GNMA, the Government National Mortgage Association.

Going public:

Selling privately held shares to new investors for the first time.

Gross domestic product (GDP):

A measure of output from United States factories and related consumption in the United States. It does not include products made by U.S. companies in foreign markets.

Guaranteed investment (interest) contract (GIC):

Debt instrument sold in large denominations issued by Insurance Companies and often bought for retirement plans. The word guaranteed refers to the interest rate paid on the GIC; the principal is at risk. The company issueing the GIC makes the guarantee, not the U.S. Government.

--- H ---

Holding period return/yield:

Income plus price appreciation during a specified time period divided by the cost of the investment.

--- I ---

Income Dividend

Payment of interest and dividends earned on a fund's portfolio of securities after operating expenses are deducted.

Income Fund

A common trust fund or mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in stocks and bonds that normally pay high dividends and interest.

Index Fund

A common trust fund or mutual fund that seeks to mirror general stock-market performance by matching its portfolio to a broad-based index, most often the Standard & Poor's 500-stock index.

Individual Retirement Account (IRA)

A personal, tax-sheltered retirement account available to wage earners not covered by a company retirement plan or, if covered, meet certain income limitations.

Individual Retirement Account (IRA) Rollover

A provision in the IRA law allowing individuals who receive lump-sum payments from pension or profit-sharing plans to "roll-over" into, or invest that sum in, an IRA. IRA funds can be "rolled-over" from one investment to another.

Income statement:

The financial statement of a firm that summarizes revenues and expenses over a specified time period; a statement of profit and loss.

Index:

A statistical measure of the changes in a portfolio representing a market. The Standard & Poor's 500 is the most well-known index, which measures the overall change in the value of the 500 stocks of the largest firms in the U.S.

Inflation risk:

Uncertainty over the future real (after-inflation) value of your investment.

Inflation:

The loss of purchasing power due to a general rise in the prices of goods and services.

Insider trading:

Trading by management or others who have special access to unpublished information. If the information is used to illegally make a profit, there may be large fines and possible jail sentences.

Integration:

A pension design tool in which contributions reflect the existence of Social Security benefits. In this process, FICA taxes are considered part of the contribution to the pension fund. Since Social Security provides a greater percentage benefit to lower paid employees, integration allows the company to increase contributions to higher paid employees.

Interest:

What a borrower pays a lender for the use of money. This is the income you receive from a bond, note, certificate of deposit, or other form of IOU.

Investment adviser:

A person who manages assets, making portfolio composition and individual security selection decisions, for a fee, usually a percentage of assets invested.

 

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