A glossary of financial jargon

By: Melanie C

Confused by some commonly used investment terms? Our new glossary should help you out.

The world of finance is full of jargon. Partly this is because, as with most things, there are similar concepts that keep repeating, so it's easier to have a condensed form of words rather than going into every last detail every time.

It would be hard to follow the cricket, for example, if every time someone was out leg before wicket, the commentator had to explain that, in accordance with law 36, the bowler had delivered a ball, not being a no ball, and the ball, not being intercepted full pitch ...

The trouble is that some of the less useful brokers and financial planners like to use jargon to hide their own lack of knowledge and put a veil of mystery over the financial world thereby justifying their large fees and commissions.

One of the main aims of The Intelligent Investor from its start nearly ten years ago, has been to blow away this cover. And, in line with this, we've decided it's high time we started piecing together a glossary, with the aim of helping you stay one step ahead of your advisers.

To kick things off, here are some explanations of commonly used jargon. We'll add to it over time, and if you'd like any particular stockmarket jargon explained, send in your request via our Ask the Experts facility – we'll answer your query and then add it to our glossary.

Net profit

This is a company's bottom line, known variously as net profit after tax, net profit or earnings. After all operating expenses, interest on borrowings, taxes and accounting deductions have been taken out, the net profit is what's left.

Sometimes the net profit includes one-off gains and losses which make it hard to compare with other companies and previous years. In these cases, companies (and analysts) often present other numbers called things like 'normalised net profit', which ignore the one-off items.

Continue reading investment information and other stock market advice at the Intelligent Investor.

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