Mastering Personal Finance: 5 essential terms you must familiarize yourself with

Understanding is priorty!

Understanding income, expenses, profits, losses, and wealth creation in the market demands constant learning and unlearning of a variety of terms and concepts.

Asset Allocation

The deliberate division of investments among different asset classes, such as stocks, bonds, cash, and alternative assets like real estate and commodities, is known as asset allocation.

Bear Market

A bear market is an extended period of falling investment prices, usually indicated by a significant drop in major market index values of at least 20% from recent peaks.

Bull Market

A bull market is defined as an extended stretch of rising prices in the financial markets; this phenomenon is most commonly seen in the stock market but may also be applied to other asset classes such as bonds or real estate.

Blue-Chip Stocks

Owning blue chip stocks denotes ownership in big, stable corporations that are regarded as safe and reliable investments because of their stability and reliability.

Bottom-up investing

This places more emphasis on examining individual businesses than macroeconomic variables; one should begin by assessing a few companies and work their way up to determine the portfolios potential as a whole.