Investing Terms and Definitions
Based on the information you provide during signup, such as age, how long you want to invest, and investment goals, Stash will assess your risk level as either Conservative, Moderate or Aggressive. We'll then recommend different investments that are suitable for your specific risk level or below.
Dividends are a distribution of profits that are paid out to the shareholders of a corporation or ETF.
An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs can be attractive as investments because of their low costs, tax efficiency, and stock-like features.
Dollar cost averaging is a way to help reduce the risk of timing the market. It entails regularly buying a fixed dollar amount of an investment. For example, if you want to invest $100 in one fund, you could invest it all now. However, you would be taking a risk that the investment, or the market as a whole, might drop in value over the coming months. With dollar cost averaging, you might invest $10 in the same fund each month, for the next 10 months.