Commonly Used Acronyms in Finance

Scott Kok - Mar 24, 2023
Some of the Most Commonly Used Acronyms in Finance
Confused

I thought I'd write a quick post outlining some of the most common acronyms used in finance that can be confusing to many people.  If you're wondering what this jargon means, I've provided brief explanations below.

 

1. IPO (Initial Public Offering) - When a private company first sells shares of stock to the public.

 

2. EPS (Earnings Per Share) - A company's net profit divided by the number of outstanding common shares.

 

3. ROI (Return on Investment) - A measure of profitability of an investment.

 

4. GDP (Gross Domestic Product) - The total value of goods and services produced within a country in a specific time period.

 

5. ETF (Exchange Traded Fund) - A type of investment fund traded on stock exchanges similar to a mutual fund.  Typically track a particular index, sector or commodity.

 

6. REIT (Real Estate Investment Trust) - A company that owns, operates or finances income-generating real estate.

 

7. The FED (The Federal Reserve) - The central bank of the United States that conducts the nation's monetary policy.

 

8. TFSA (Tax Free Savings Account) - A type of account providing Canadian's tax benefits for saving.  In most cases investment income, capital gains and dividends earned within the TFSA are not taxed.

 

9. RRSP (Registered Retirement Savings Plan) - A type of account providing Canadian's with a tax-deferral.  Contributions are tax-deferred meaning that your contributions are not taxed until withdrawn.  Your contributions offer a tax deduction.

 

10. CPP (Canada Pension Plan) - A monthly taxable benefit from the government for contributors over the age of 60.  The amount your receive is based on your average earnings, contributions to the plan, and the age at which you elect to receive benefits.

 

11. OAS (Old Age Security) - A monthly taxable benefit from the government for anyone age 65 or older.  The amount you receive is based on your income and how long you have lived in Canada after the age of 18.

 

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