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administrators Decoding Investment Jargons

REIT, EBITDA, IPO, WHAT DO THEY ALL MEAN?! If these terms got you scratching your head, this Learning Unit has got you covered!

Watch our community members have a go at guessing investment abbreviations!

Learning financial jargon as a baby investor may be daunting but it is part and parcel of the investing experience. The more you are familiar with them, the more confident you will be taking on bigger investing concepts. We'll continuously expand this master-list of investment jargon, so do check back from time to time.

• DCA = Dollar-Cost Averaging
  It is a strategy where you invest in fixed intervals at fixed amounts - no matter what the market condition looks like. This means you automatically buy more units when prices are low and fewer units when prices are high. Over time, the average cost of your investment could potentially be lower versus a one-time, lump sum investment. DCA also sometimes goes by a different name: Regular savings plan (RSP).

• REIT = Real Estate Investment Trusts
  It is an investment vehicles that lets you invest in real estate at an affordable price by putting your money into a collective pool of funds where REIT manager then invests in a portfolio of income generating real estate assets, from shopping malls to offices to hotels.

• IPO = Initial Public Offering
  Initial public offerings (IPOs) are created by private companies and sold on the primary stock market to raise funds for growth to become a public company.

• ROE = Return on Equity
  Earnings relative to the amount invested by shareholders. ROE=Net income/Shareholders’ equity. It is usually used to show how profitable a company is, and particularly, how good it is in using shareholders’ investment to generate earnings.

• CDP = Central Depository
  To start trading in the Singapore securities market, a Central Depository (CDP) account is required. It is operated by SGX, provides an integrated clearing, settlement and depository facilities for customers in the Singapore securities market, including both equities and fixed income instruments.

• EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortisation
  EBITDA is essentially net income (or earnings) with interest, taxes, depreciation, and amortization added back. EBITDA can be used to analyze and compare profitability among companies and industries, as it eliminates the effects of financing and capital expenditures.

• ROI = Return on Investment
  The rate of return a company gets from its own investment. It is calculated by dividing the company's net income by its net assets.

• FOREX = Foreign Exchange
  Also known as FX, it is the trading of one currency for another. Foreign exchange transactions can take place on the foreign exchange market, also known as the forex market.

• NAV = Net Asset Value
  It is calculated by subtracting the total value of liabilities from the total value of an entity’s assets. Similar to how share prices are an indicator of how much a company is worth, NAV serves as a measure of how a unit in a unit trust or exchange-traded fund (ETFs) is worth.

• ETF = Exchange-traded Funds
  An ETF is an investment fund listed and traded on the stock exchange. Many ETFs track an index such as a stock, bond or commodity index and seek to produce returns that reflect the performance of a particular index.