I wanted to (finally) give you a money dictionary that doesn’t require a dictionary to understand the word’s definition. That doesn’t exist . . . so I made my own. You know how you explain a term to a friend who doesn’t “get” it? That’s the way it’s written here. Let this glossary be your go-to guide for definitions with a practical perspective whenever you need a little cheat-sheet. Some stuff changes over the years, but these basics never go out of style.
Year on Year -
Measuring the current value of something, such as a business, against its value exactly a year earlier, to see how (and ultimately why) the business
has performed as it has.
Yield: The interest rate you get paid when you buy a security, expressed by percent. With a bond, you’ll notice it has something called “YTM,” “yield” or “yield-to-maturity,” which tells you the rate of return you will receive if you hold the bond until maturity. For example, if you buy a ten-year $10,000 at 6% “yield,” you’ll receive $600 per year for ten years, on top of the $10,000 you originally invested. Stocks also have yields, often called dividend yields. Invest $10,000 in a stock with a 3% dividend yield and you’ll receive $300 per year in cash.