FINANCIAL TERMS EXPLAINED LIKE A 15 year old

**ETF** — A basket of investments you can buy with one purchase. **Stock** — A tiny piece of ownership in a company. **Dividend** — Money a company pays shareholders for owning its stock. **Yield** — How much income an investment pays compared with its price. **Capital Gains** — Money you make when you sell an investment for more than you paid. **Compound Interest** — Your money earns money, then that money earns more money. **Market Cap** — How much a company is worth based on its shares. **P/E Ratio** — A way to compare a stock’s price with the company’s earnings. **Expense Ratio** — The annual fee an ETF or fund charges investors. **Volatility** — How much and how quickly an investment’s price moves. **Bull Market 🐂** — When prices are generally rising. **Bear Market 🐻** — When prices are generally falling. **Portfolio** — Everything you own as an investor. **Diversification** — Spreading your money across different investments. **Asset Allocation** — How you divide your money between stocks, bonds, cash, etc. **Roth IRA** — A retirement account where qualified withdrawals can be tax-free in the U.S. **401(k)** — An employer-sponsored retirement account in the U.S. **Index Fund** — A fund designed to follow a market index. **S&P 500** — An index tracking roughly 500 major U.S. companies. **Nasdaq-100** — An index of 100 large non-financial companies listed on Nasdaq. **Dollar-Cost Averaging (DCA)** — Investing a set amount regularly instead of trying to time the market. **Rebalancing** — Adjusting your portfolio back toward your target allocation. **Liquidity** — How fast you can turn something into cash. **Market Order** — Buying or selling immediately at the best available price. **Limit Order** — An order to buy or sell only at a specific price or better. **Bid** — The highest price someone is currently willing to pay. **Ask** — The lowest price someone is currently willing to sell for. **Spread** — The difference between the bid and ask price. **IPO** — When a private company first sells shares to the public. **Recession** — A significant slowdown in economic activity. **Inflation** — When prices generally rise and your money buys less. **Interest Rate** — The cost of borrowing money or the return earned on savings/lending. **Federal Funds Rate** — A key U.S. interest rate influenced by the Federal Reserve. **Bull Trap** — A temporary rise that makes investors think prices are recovering before another decline. **Dividend Reinvestment** — Using your dividends to buy more shares. **Total Return** — Your overall investment gain from price appreciation plus income such as dividends. **ROI** — Return on Investment; how much you gained or lost relative to what you invested. **EPS** — Earnings Per Share; a company’s profit divided by its shares outstanding. **Free Cash Flow** — Cash a company has left after paying for its operating needs and capital expenditures. **Debt-to-Equity** — A measure comparing how much debt a company uses relative to shareholders’ equity.