Ever wonder what all those abbreviations mean? Well here is a list of some investing acronyms to look out for.
ETF
Exchange Traded Fund
This is a security that attempts to mimic an index or a basket of stocks. The ETF will trade like a stock on an exchange with prices changing throughout the day. Double check with your broker about margin requirements for ETFs.
TARP
Troubled Asset Relief Program
A government program that was created for the establishment and management of a Treasury fund, in an attempt to curb the ongoing financial crisis of 2007-2008.
The TARP gives the U.S. Treasury purchasing power of $700 billion to buy up mortgage backed securities (MBS) from institutions across the country, in an attempt to create liquidity and un-seize the money markets.
FIFO
First-In First-Out
This is a tax strategy and accounting method for individual investors to report to the IRS the gains and losses made in their portfolio by assuming that the first equities in were the first to be sold. It also applies to a business’ accounting strategy for inventory as well as being a rule for proper food handling.
LIFO
Last-In First-Out
This is also a tax strategy and accounting method for individual investors to report to the IRS the gains and losses made in their portfolio by assuming that the last equities in were the first to be sold. It applies to a business’ accounting strategy for inventory as well.
DRIP
Dividend Reinvestment Plan
This is a plan offered by a corporation that allows investors to reinvest the dividends as fractional shares. So instead of receiving a cash dividend you would instead get a partial share and your account would grow that much faster. For example, you could continually invest in a company that sells a home security system in Canada and profit from gains and dividends.
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