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.