Financial Terminology (investment, interest, savings)

20 Financial Terminology Words with Meanings and Examples

Finance refers to the management of money. Here are 20 financial terms with their meanings and an example sentence each:

1. Investment: The use of money to acquire assets with the expectation of future income or appreciation.
   • Example: She invested her savings in stocks and bonds.
2. Interest: A charge for the use of money, typically expressed as a percentage.
   • Example: The interest rate on her loan is 5%.
3. Savings: Money set aside for future use.
   • Example: He is saving money for a down payment on a house.
4. Budget: A plan for how to spend money.
   • Example: She created a budget to track her expenses.
5. Debt: Money owed to another person or entity.
   • Example: He has a lot of credit card debt.
6. Credit score: A number that represents a person’s creditworthiness.
   • Example: A high credit score can help you get a loan at a lower interest rate.
7. Compound interest: Interest earned on both the principal and the accumulated interest.
   • Example: Compound interest can help your savings grow faster.
8. Dividend: A payment made to shareholders by a company.
   • Example: The company paid out a dividend to its shareholders.
9. Stock: A share of ownership in a company.
   • Example: She bought shares of Apple stock.
10. Bond: A debt security issued by a government or corporation.

• Example: He invested in government bonds.

11. Mutual fund: A pool of money invested in a variety of securities.

• Example: She invested her retirement savings in a mutual fund.

12. Retirement savings: Money set aside for retirement.

• Example: He is contributing to a retirement savings plan.

13. Insurance: A financial product that protects against loss.

• Example: He has car insurance and health insurance.

14. Premium: The amount paid for an insurance policy.

• Example: The premium for his car insurance is $500 per month.

15. Deductible: The amount that you must pay out of pocket before your insurance coverage kicks in.

• Example: His health insurance deductible is $1,000.

16. Bankruptcy: The legal process of declaring oneself unable to pay one’s debts.

• Example: She filed for bankruptcy after losing her job.

17. Mortgage: A loan to purchase a home.

• Example: He took out a 30-year mortgage to buy a house.

18. Interest rate: The cost of borrowing money, expressed as a percentage.

• Example: The interest rate on his credit card is 18%.

19. Inflation: A sustained increase in the general price level of goods and services in an economy over time.

• Example: High inflation can erode the purchasing power of consumers.

20. Deflation: A sustained decrease in the general price level of goods and services in an economy over time.

• Example: Deflation can lead to a decrease in consumer spending and economic activity.