6 Financial Jargon Explanations
Every industry has it’s own jargon. Here are a few terms you may hear from time to time.
“Smart Money”. When a commentator says something to the effect of “It’s where the smart money is going”, they typically mean the professional investors. Professional investors are those who invest in large numbers, for institutions or large groups of investors.
“Stupid Money”. Since stupid is generally thought of as the opposite of smart, you’d think when referring to money, it would mean someone who is not an institutional investor. Not so. Rather, when someone says “stupid money is going there” it generally means excess amounts of money, or people who are paying abnormally high valuations for an asset.
“Lazy Money”. When we say money is lazy, we mean that in the true sense of the word, that it is not working. Lazy money may be money sitting in cash or excess amounts in a savings account, money market or other place where it is not invested or earning a rate of return.
“Sweat Equity”. When a person spends their personal time and physical or intellectual effort to build the value of an investment, it’s referred to as sweat equity. My husband and I did this personally in many capacities: in our younger years, we renovated homes and sold them. Later, we went on to build businesses that grew value. It was our “sweat” that built much of the “equity”, or value of the investment or business.
“Hard Assets”. Investing in a hard asset usually means your money is used to buy something tangible, like a piece of property or a building, rather than something like a stock or bond.
“Paper Assets”. Investing in a paper asset generally refers to investments like stocks, bonds, certificates of deposit, promissory notes or other investments whereby the ownership is represented by a paper or electronic document.
There you have it. You may now be six financial jargons smarter!
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.