When venturing into stock investing, it's important to know what the various terms you encounter refer to. In this article, you'll find the most important terms to help you get started investing in stocks.
![[object Object]](/lib_RbTlSKWMcGXWAOju/d7vsszf64meg8doq.png?w=400)
Trial
About
EN
Menu
- Trial
- About
When venturing into stock investing, it's important to know what the various terms you encounter refer to. In this article, you'll find the most important terms to help you get started investing in stocks.
A share can be defined as a stake in a company that is available for purchase by the consumer. The price of a share can vary widely - this depends, among other things, on how the company is performing at the moment and what the future prospects are. It is possible to buy shares in listed companies.
Diversification is also called spread and in the context of shares it means spreading your investments between different sectors, companies, etc. In general, it means spreading your money between different types of investments. With a certain level of diversification, you will also reduce the risk of your overall stock portfolio.
EPS is the abbreviation for Earnings Per Share. EPS is the figure that indicates the value/earnings of how much the company behind the stock earns per share. Read more here.
Unlike a share, when you buy an ETF you become the owner of a share in a fund. The fund you buy into owns a portfolio of shares. These shares are continuously adjusted to match a given index, so with an ETF you are guaranteed a return that matches the average of the given index. An ETF can be bought on the stock exchange, in the same way as a share.
In the context of equities, an index is a term used to describe a selected group of stocks that are of a certain size and typically originate from the same geographical area, for example a country. In the Danish market, the best known index is the C25 index, which covers the 25 most traded stocks in Denmark.
PEG ratio covers price/earnings-to-growth. It looks at the previously calculated P/E ratio divided by the earnings growth rate for a specified period of time. Read more here.
The term portfolio refers to a collection of stocks. This means that when you talk about a portfolio, you are referring to all your equity investments. You can read more about portfolios here and how StoxIQ can give you the best conditions with your portfolio.
The P/E ratio indicates whether a stock is considered to be cheap or expensive. This figure indicates how much you should pay for a crown's profit of the stock after tax. Read more here.
Risk appetite is about deciding, before you start investing in shares, how high or low a risk you are comfortable taking with your investments. Greater risk can mean greater returns, but potentially also greater losses. Therefore, it is important that you have decided on your risk appetite, in relation to your investments. Risk appetite is typically divided into high, medium and low appetite.
The time horizon is something you choose and is about how long you plan to hold a stock investment before selling it again. If you buy a share with the intention of saving up to buy a car in 7 years, your time horizon will be 7 years. The time horizon also influences which investments you should choose to make. As a general rule, a longer time horizon will mean you can choose stocks with more risk.
Of course, there are more concepts than the above when it comes to stock investing; those we've listed above are just the most important when you're a new investor embarking on a stock adventure.
You can be sure that these concepts will appear - also in the StoxIQ app. However, the most important thing for us is that it is easy and clear, so that the concepts become useful tools on your investment journey.
In other words; let the StoxIQ app help you with overview, strategy, time horizon and risk appetite. All these tools are available in our app and you will therefore be able to make rational and thoughtful choices about your investments, instead of acting on your emotions, or on the basis of sudden insights. Download the StoxIQ app today and discover your options!
Available on the AppStore and Google Play
Get great investment tips, guides and market commentary by signing up to our newsletter
