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Asset allocation
Act of allocating money across different assets such as stocks and bonds to achieve an objective.

Asset class
A group of financial instruments displaying similar characteristics, for example stocks or bonds.

Bonds
Debt securities, similar to IOUs. Companies and governments may sell bonds to raise money for investments or operations. Most bonds (except zero-coupon bonds) pay income regularly until they mature. Upon maturity, the principal amount is returned to investors.

Capital
Initial sum of money used to invest. Capital may be referred to as principal or investment amount.

Diversification
Investing in a number of different stocks and/or bonds with the objective of reducing risk.

Investment-linked plans (ILPs)
Combination of investment and insurance in one product. ILPs offer potential capital appreciation through investments (eg stocks or bonds) in addition to life insurance.

Investment portfolio
Consists of a number of different types of investments such as unit trusts, structured products, and deposits. A portfolio can have one or more asset class.

Rate of return
Returns or interest received from an investment. Usually expressed as a percentage.

Stocks
Companies issue stocks to raise money for investments or operations. Stocks, also known as equities, represent ownership in a company and they can be bought or sold over a stock exchange.

Structured products
Products that usually invest in bonds and derivatives (financial instruments that derive their value from another investment such as stocks). Commonly offers protection of capital if held to maturity.

Unit trusts
Pooled money from a group of investors. This sum of money is managed by an investment professional for a fee, usually charged on an annual basis.