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“I'm still new in the game of investing and I don't understand the basic investment terminology”

by , 21 September 2017
“I'm still new in the game of investing and I don't understand the basic investment terminology”
Like many of you, I receive a lot of emails every day.

Usually, my inbox is filled with new investment ideas from some of the world's best financial publications - Daily Wealth, Sovereign Society, Capital & Conflict, Motley Fool to name a few.

While I was reading, trying to find new investment ideas to share with my readers, one email in particular caught my eye.

And I just had to share it with you today.

It had nothing to with investment opportunities or economic news.

Importantly, it was from one of my Real Wealth subscribers, Kamo. This is what he said…

“Good Day Josh, I’m still new in the game of investing and I want to clarify the terminology you use like, Gains, Dividends, Gain (including dividends) etc?  I really thank you because you are trying your best.”
Firstly, not understanding the basic investment terminology is nothing to embarrassed about. And certainly not a silly concern to have.
Many years ago, I didn’t understand investing or the terminology used. But you have to begin somewhere and so I learnt everything I could about investing.
You see as investors, it’s crucial to know and understand these important investing terms.
Once you know, investing becomes easier to understand. And when you begin to understand more about investing, your confidence will grow and you can start making money from the stock market.
And that’s exactly what I’m here for -  to help guide you through your investment journey.
So today I’m going to answer Kamo’s important question and explain some investing terms every investor needs to understand… 
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The basic investment terminology explained
Every month, I update two portfolios that I manage - Real Wealth and South African Investor.
This is where I show readers the shares we’ve bought, how much we’ve made or lost and whether we should hold, buy more or sell.
These are very important indicators that every investor needs to know. So I’m going to explain them one by one.
#1: Ticker: The ticker is also known as the “short code” of a listed company. For example: Sasol’s ticker is (JSE: SOL), Naspers is (JSE: NPN).
Investors use the ticker when the buy or sell a stock from their brokers. I use the ticker symbol when I research and analyse stocks. It’s just a quicker to find a company.
#2: Date entered: This is the date I enter a recommended stock into the portfolio.
#3: Tip Price (cps): This is the price the share is trading at when I first recommend it as a buy. The prices are displayed in cents. Usually, I’ll issue a “buy below” signal which tell you where you can get into the stock.
#4: Current Price (cps): This is the price the share is trading at right now. Usually a day before Real Wealth is sent out, I update all shares in our portfolios with their up to date prices.
#5: Gain Profit/loss: This is the percentage gain/return or loss you’ve made off the share.  For example, if you buy a share at 100c and in a month, its share price moves to 120c. Your gain/return would be 20%. If the share moves to 80c, your loss would be 20%.
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#6: Dividends (cps): The benefit of investing in shares is many pay you dividends. Dividends are paid to shareholders out of a company’s profits (or reserves). Dividends are like a “reward” you receive for holding the company’s shares. Each year (sometimes twice a year) Company’s pay out a certain dividend for each share. For example, if a company says it will pay investors a 50c dividend. This means, for every share you hold, you’ll receive 50c. So if you own a 100 shares, you’ll receive R50 in dividends, which you can either re-invest or withdraw. It’s better to re-invest as you don’t pay 20% dividend tax.
#7: Gain (including dividends): This is simply the gains you’ve made on a company’s share price plus the dividend you have received. This is why dividend-paying shares are great investments. If capital growth is slim, you’ll still receive “income” for holding the shares.
#8: Action to take: This is one of the most important terms you must know. Each month, I run all the shares we hold in both portfolios through my strict investment strategy to see if they’re still a buy, hold or sell. I update this signals every month, so it’s important you take note of the signal, because you’ll know exactly what action to take with a particular stock.
So this is really all the portfolio terminology you need to understand.
And like I said, the more you learn, the easier investing will be and the more money you can make! 
Always remember, knowledge brings you wealth,
Joshua Benton, Real Wealth
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“I'm still new in the game of investing and I don't understand the basic investment terminology”
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