Glossary

An algorithm is a step-by-step set of instructions a computer follows to solve a problem or complete a task, from sorting a list to ranking search results.

An API (Application Programming Interface) is a set of rules that lets different software applications communicate, allowing one program to use the features or data of another.

Artificial Intelligence (AI) is the field of building computer systems that can perform tasks normally requiring human intelligence, such as understanding language, recognizing images, or making decisions.

A bear market is a period in which asset prices fall 20% or more from recent highs, usually amid pessimism and weakening economic conditions.

A blockchain is a distributed, tamper-resistant digital ledger that records transactions across many computers, forming the backbone of cryptocurrencies and other decentralized systems.

Bootstrapping is building a company using personal savings and revenue rather than outside investment, keeping founders in control but limiting how fast they can spend.

A bull market is a period in which asset prices are rising or are expected to rise, typically accompanied by investor optimism and strong economic conditions.

Cloud computing is the delivery of computing services-servers, storage, databases, and software-over the internet, so users can access resources on demand without owning hardware.

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Over time it produces exponential growth, which is why it is central to long-term investing.

A cryptocurrency is a digital currency secured by cryptography and typically built on a blockchain, allowing peer-to-peer transactions without a central authority.

Diversification is the practice of spreading investments across different assets, sectors, or regions to reduce the impact of any single investment performing poorly.

A dividend is a portion of a company’s profits paid out to shareholders, usually in cash and on a regular schedule. It is one way investors earn a return from owning stock.

EMI (Equated Monthly Installment) is the fixed monthly payment a borrower makes to repay a loan, covering both interest and principal over the loan tenure.

An ETF (Exchange-Traded Fund) is an investment fund that holds a basket of assets and trades on a stock exchange like a single share, offering low-cost diversification.

Inflation is the rate at which the general level of prices for goods and services rises over time, reducing the purchasing power of money. Moderate inflation is normal in a growing economy; high inflation erodes savings.

An interest rate is the cost of borrowing money or the reward for saving it, expressed as a percentage. Central banks adjust benchmark rates to influence inflation and growth.

A large language model (LLM) is an AI model trained on vast amounts of text to understand and generate human-like language, powering tools like chatbots and writing assistants.

Liquidity describes how quickly and easily an asset can be converted to cash without significantly affecting its price. Cash is the most liquid asset; real estate is relatively illiquid.

Machine learning is a branch of AI in which systems learn patterns from data and improve at a task over time, rather than being explicitly programmed with rules.

A mutual fund pools money from many investors to buy a professionally managed portfolio of stocks, bonds, or other assets. Investors own units proportional to their contribution.

A recession is a significant, widespread decline in economic activity lasting more than a few months, typically visible in falling GDP, employment, and spending.

ROI (Return on Investment) measures the profit or loss from an investment relative to its cost, usually as a percentage. It is a common way to compare the efficiency of investments.

SaaS (Software as a Service) is a model where software is hosted in the cloud and accessed via subscription over the internet, rather than installed and owned outright.

A startup is a young company built to develop a scalable business model around an innovative product or service, often growing quickly and seeking outside funding.