investing

5 financial terms not to take for granted

Long term
Long-term © Paul Rich Studio/Shutterstock.com

Investment phrases such as "we're in it for the long term" or a bond classified "long term" can equate to periods as short as two to three years or as many as 20-plus years. Being clear on an investment's time horizon is important because it allows investors to compare it with other holdings as well as economic data and market trends.

Instead of using a vague time frame to evaluate an investment, "Use an entire business cycle to gauge how an investment performs, examining it during both boom and bust phases," says Palushaj.

"Whether you're buying a stock or bond, investors need to understand why they are buying it and at what point they should consider selling it," adds Osborn. "Investors shouldn't just accept or assume a longer time frame will fix a poor investment."

Investors can avoid some of the pain and discomfort that comes from taking popular financial words for granted by being armed with some helpful questions, getting time-tested advice and knowing that "what you hear isn't always what you get."

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