How you divide your investments among different asset categories like stocks, bonds, and cash. Your allocation depends on your goals, risk tolerance, and timeline. Younger investors typically have more stocks (higher risk, higher potential return), while those closer to retirement often hold more bonds (lower risk, steadier returns).

Earning returns on your returns. When your investments grow, those gains are reinvested and earn additional returns. Over time, this creates exponential growth. Albert Einstein allegedly called it "the eighth wonder of the world." Starting early maximizes compound growth.

A portion of a company's profits paid to shareholders, usually quarterly. Dividend-paying stocks provide regular income in addition to potential price appreciation. You can reinvest dividends to buy more shares (compounding) or take them as cash. Mature, stable companies often pay consistent dividends.

The annual fee charged by mutual funds or ETFs, expressed as a percentage of your investment. A fund with a 0.5% expense ratio costs $5 per year for every $1,000 invested. Lower is better—high fees significantly reduce long-term returns. Index funds typically have expense ratios under 0.2%.

The total value of a company's outstanding shares (stock price × number of shares). Companies are categorized as large-cap (over $10B), mid-cap ($2B-$10B), or small-cap (under $2B). Large-cap stocks are typically more stable; small-cap stocks offer higher growth potential but more volatility.

How much an investment's price fluctuates over time. High volatility means bigger price swings (both up and down). Stocks are generally more volatile than bonds. Understanding your tolerance for volatility helps you choose appropriate investments and avoid panic selling during downturns.