Glossary entry · What you own

Principal

Definition

The starting sum of money — what you originally invested or borrowed, separate from any interest, returns, or losses generated on top of it.

Example

If you invest $10,000 and it grows to $15,000, the principal is $10,000 and the gain is $5,000.

A share of ownership in a company. You profit if the company grows; you lose if it falters.

A loan you make to a government or company. They pay you interest, then return your money.

A basket of many investments — often hundreds — bought in a single transaction.

A representative basket of a market — like the S&P 500 or the IBEX 35.