Bond	An IOU issued by a corporation, the U.S. Government, or local government. Those who buy the bonds are lending money to the issuer of the bond. In return, the bondholders receive a fixed rate of interest (like 6%) until the maturity date of the bond. At maturity, the bondholder will receive the full value (face value) o the bond. Because bonds pay a fixed rate of interest, the price (or market value) does not fluctuate very much. Due to this stability, bonds are considered to be conservative investments. The average return of bonds is 6%.
Stock	A certificate that represents ownership in a corporation. The investment return of stock is determined two ways - first, the corporation may pay a dividend to the shareholders; second, the market value (or price that others are willing to pay) of the shares of stock may go up or down. Together this profit is considered to be the "total return". The average return over a ten-year period for stocks (or equities) is 10-12%.
Stock Market	Stocks are bought or sold. The "market" refers to this activity. There are organized exchanges, such as The New York Stock Exchange, that buyers and sellers go through to place the transactions (or trades).
Mutual Fund Company	An investment company that uses its customers' deposits to invest in stocks and bonds. The customers' deposits are pooled together and invested in a mutual fund (or portfolio). The funds usually have an investment objective such as "Balanced" which means invest the account partly in bond and partly in stocks, "Income" which means invest in bonds and stocks with high dividends, "Growth" which means invest in stock or "Global" which means invest in foreign securities.
Asset Allocation	An asset is something you own. Asset allocation refers to your investments. The mixture of different types of stocks and bonds that you own is called the allocation of your investments. A conservative asset allocation holds more bonds and money market than stocks, a balanced asset allocation holds an even amount of bonds and stocks and an aggressive asset allocation holds mostly stocks.
Diversification	Investing in different companies in different industries or in several different types of investment vehicles. This reduces your risk by "not having all your eggs in one basket.
Blue Chip Stock	The Blue Chip Stocks are VERY large companies such as Wal-Mart, Exxon, AT&T, Xerox, etc. The change in the price of the stock of these companies is usually what is referred to when you hear that the "market is up" or that the "market is down". The Dow Jones Industrial Average measures the change in the price of thirty blue chip stocks and reports this as representative of all blue chip stocks. Incidentally, these stocks got their name from the game of Poker, where the blue chip is the most valuable.
Growth Stocks	The stock of a smaller company that is growing faster than the market norm. The changes in price of the stock can fluctuate up and down a lot. This potential volatility causes the investment in growth (or small cap) stocks to be considered aggressive. An average return in growth stock investments is 12-14%.
International Stocks	Stock of companies located in other countries and traded on foreign stock exchanges are called global or international investments. Also an aggressive investment, these stocks have the same growth potential as U.S. stocks, but the price is not tied to the U.S. Stock market like Blue Chip stocks. If the U.S. market goes down, these stocks