Investing glossary
Quick definitions for terms you might come across.
ASX
Australian Securities Exchange: a market operator where a range of listed securities are traded.
Asset allocation
The way investment exposure is divided across different asset classes or categories.
Bid-ask spread
The difference between the price buyers are offering and the price sellers are asking.
Brokerage
A charge a trading platform may apply for buying or selling an investment.
Compound growth
Growth calculated on a changing balance so earlier gains can affect later gains. Losses can compound too.
Diversification
Spreading exposure across multiple investments so one holding has less influence on the result.
Dividend
A payment a company may make to shareholders. It is not guaranteed.
ETF
Exchange-traded fund: a fund whose units generally trade on an exchange.
Index
A rules-based measure of a selected group of securities or assets.
Inflation
A general rise in prices that reduces purchasing power over time.
Management fees and costs
Charges associated with operating and managing an investment product.
PDS
Product Disclosure Statement: a document describing important details, costs and risks of certain financial products.
Rebalancing
Changing portfolio holdings or proportions relative to a chosen reference allocation.
Risk tolerance
A person’s willingness to accept uncertainty or investment losses; distinct from their financial capacity for loss.
Superannuation
Australia’s long-term retirement savings system.
Tracking difference
The difference between a fund’s actual return and the return of its benchmark over a period.
Volatility
The extent or frequency of changes in an investment’s price or value.