Glossary of Investment Terms

Welcome to the Investment Glossary. We hope you find these terms useful. Should you have a term you would like addressed, please let us know. We would be happy to add it to our list.

Inflation Increases in the general price level of goods and services; i.e., your dollar won't buy as much as it used to. Inflation is commonly reported using the Consumer Price Index (CPI) as a measure. Inflation is one of the major risks to investors over the long term as savings may actually buy less in the future if they are not invested with inflation as a consideration.

Interest Rate Driven Refers to a point in the business cycle when interest rates are declining and bond prices are rising. This is usually enough to inspire a stock market rally as money shifts from interest rate instruments to equity based instruments. (See Earnings Driven.)

International Finance Corporation Investable Index (IFCI) A benchmark against which portfolios invested in emerging markets can be compared. "Investable" means it accounts for foreign ownership restrictions that are in place in various countries.

Inverted Yield Curve A situation where short term interest rates are higher than long term rates. Normally, lenders earn higher yields when committing money for longer periods; this is a positive yield curve. Inverted yield curves occur when surging demand for short term credit drives up short term rates. Usually a sign of increased inflation accompanied by low levels of confidence in the economy. Historically, this has preceded a recessionary period.

IPO Initial Public Offering.