Glossary

Portfolio diversification is an investment strategy that involves spreading investments across various financial instruments, industries, and other categories to reduce risk. This approach helps to mitigate the impact of poor performance in any single investment.

A recession is a significant decline in economic activity across the economy that lasts for an extended period, typically visible in GDP, income, employment, manufacturing, and retail sales. It often leads to increased unemployment and reduced consumer spending.

Risk tolerance is an investor's ability and willingness to endure fluctuations in the value of their investments. It varies from person to person and is influenced by factors such as age, financial situation, and investment goals.

A savings account is a deposit account held at a financial institution that provides a modest interest rate. It is designed for individuals to save money while maintaining easy access to their funds.

The stock market is a collection of markets where shares of publicly traded companies are bought and sold. It serves as a platform for companies to raise capital and for investors to gain ownership in businesses.