Jake Safane

Mon, Jun 9, 2025, 10:02 AM6 min read

If you’re brand-new to investing, all the terminology related to the stock market can be off-putting. Instead of learning what feels like a new language, you might feel overwhelmed and hold off on investing. However, many stock market and general investing terms are much simpler than they seem at first glance. If you keep an open mind, you might be surprised how quickly you can learn the lingo and gain confidence investing.

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Here are some examples of stock market terms that you should know and aren’t as complex as they might sound.

Also see eight tips to invest in stocks for beginners.

You might see headlines about stock market volatility or hear about the volatility of a particular stock, and while it might seem like something to fear, it’s not necessarily something to run from.

“The term volatility can often scare newer and even experienced investors because it is often associated with negative events, but the meaning itself is quite simple. Volatility means how much a stock goes up and down,” said Nicole Carlon, CFP, wealth management advisor at WiseOak Wealth.

And not all stocks are the same in terms of volatility. “Some stocks may be more volatile than others. This means the price of the stock will go up and down more often than one that is less volatile. It does not mean that one stock is better than the other, but that the value fluctuates more. It’s up to the investor how much fluctuation they feel they can handle,” Carlon explained.

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Another key term to know is diversification, as it’s typically an important part of managing risk.

“Diversification sounds to the average investor like a complicated strategy, but in layman’s terms it means not putting all of your eggs in one basket,” Carlon said. “Essentially, an investor would buy positions in multiple categories — stocks, bonds, real estate, etc. — instead of using all their funds to only buy one stock. The general concept is that if the money is spread into different positions and one does poorly, the others will hopefully do better to balance the account out.”

You might hear an advisor ask you about your investment horizon or see this term come up in contexts like retirement planning. The good news is that it’s a pretty simple term that typically aligns with certain investing practices.

“The investment horizon refers to the period during which you expect to keep your money invested before needing to use it. It can be short-term (less than a year), such as a down payment or a car; medium-term (a few years), like college expenses for kids in five years; or long-term (10-20 years or more), like retirement,” said Jon Knotts, chief investment officer at Expressive Wealth.