Understanding Financial Terms

by Mike

Many people complain that they have trouble understanding some of the financial terms and lingo used by industry insiders.   But is that really any different than any other field?

Think about it.  Doctors have a language all of their own where they discuss MRIs, resveratrol, and the medulla oblongata.

If you listen to a couple of astronomers and cosmologists talk you’re likely to hear terms like redshift, gamma ray bursts, dark matter, and multiverse.

I’m guessing you’d have a hard time following either of those conversations.  So why is it so unusual to listen to financial industry insiders using lingo like Roth IRA, master limited partnership, asset allocation, and professional LLC?

There are lots of complicated financial terms being thrown about and if you want to take control of your money you need to learn them as best as you can.  That way, when you hear a story on the news discussing the S & P 500, you’ll know what they’re talking about!

The good news is that most financial terms can be easily researched on the internet.  I found a great resource on Investopedia that lists hundreds of financial terms with their meanings.   Spend some time scrolling through their online dictionary so you can learn what these terms mean and how they may relate to you.  Remember, one of the best things you can do to improve your finances is to simply educate yourself so you can make the best decisions possible.

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{ 5 comments… read them below or add one }

Finanzas Personales

Another good strategy to develop a better understanding of financial concepts is through personal finance blogs… such as this one.
I think basic terms like the ones you mention and others such as risk, compound interest and budget, just to mention a few, should be a natural part of everybodies language. It shouldn’t be even considered lingo…
Finanzas Personales´s last [type] ..Cuando una deuda suma


Chris @ MyMoneyMess

While this post is 100% correct, don’t you think that those of us who write personal finance articles could do a better job of either providing a glossary or linking to one to make things a little easier on our readers?



I completely agree. That’s why I linked to the investopedia dictionary…I think it’s a great resource.


The Prudent Planner

This is something I’ve been working on for a while now. It will take me a long time but I’m learning quite a bit. I’ve visited wisegeek dot com a couple times and they seem to know what they are talking about but here are far too many advertising…more sites need to be like wikipedia. My next article will be “What is gap insurance?” I find that I’m learning quite a bit by looking up financial terms.
The Prudent Planner´s last [type] ..What is a municipal bond



Wisegeek does have a lot of ads, but they must rake in some serious cash and most of the content is pretty well written.


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