Glossary
85 terms. Tap any dotted term inside a lesson to see its card, or browse the whole list here.
A
- Absolute vs. percentage gain
- The absolute gain is how much money you made; the percentage gain is that amount divided by what you put in. They answer different questions: the first says how much, the second how well. When people start with different amounts, the two can rank them in opposite order.
- In pesos: Making $500 MXN on $1,000 is a 50% gain; making $2,000 on $100,000 is only 2%. In absolute terms the second one wins; in percentage terms, the first.
- Read the lesson: 3 common mistakes when you start investing →
- Actipesos
- The fictional money of the Actinver Challenge (Reto Actinver) simulator. The name is Actinver's, and Actinver itself says they are not legal tender: nothing is really bought or sold, and nothing can be cashed in. They only keep score of how each portfolio does against the rest.
- In pesos: Finishing the contest 50,000 actipesos ahead puts zero real pesos in your pocket; what you do keep is what you learned about orders, fees and discipline.
- Read the lesson: How a stock exchange actually works →
- Aguinaldo
- The year-end bonus Mexican law requires employers to pay (at least 15 days of salary) before December 20. Money that arrives once a year does not belong in a monthly plan.
- In pesos: On a $12,000 MXN monthly salary the aguinaldo is at least $6,000: a one-off, not part of what you can spend each month.
- Read the lesson: The 50/30/20 rule for your first budget →
- Appreciation (currency)
- The opposite of depreciation: the currency gains value and each dollar costs less of it. The number on the chart goes down.
- In pesos: From 19.00 to 18.00, a $1,000 USD trip drops from $19,000 to $18,000 MXN.
- Read the lesson: What it means when the peso weakens →
B
- Banxico
- Banco de México, the country's central bank. Its main job is keeping inflation low and stable; it sets the reference interest rate in pesos.
- In pesos: When Banxico raises its rate, credit cards and car loans get pricier and CETES pay more.
- Read the lesson: What inflation is, and how it hits you →
- Beta
- How much a stock tends to move when the whole market moves, usually measured against an index like the S&P 500 with past returns. A beta of 1 moves like the market; above 1, more; below 1, less. It describes the past, it does not promise anything.
- In pesos: If the market rises 10% and a stock with a beta of 1.5 tends to rise about 15%, a $10,000 MXN position would gain about $1,500, and lose about as much if the market fell 10%.
- Read the lesson: Why the S&P 500 goes up or down →
- Bid-ask spread
- The gap between the best price someone will pay and the best price someone will sell at. Narrow means liquid and cheap to trade; wide means you lose money the moment you enter.
- In pesos: If the best bid is $99.90 and the best ask $100.10, you buy at 100.10 and could only sell at 99.90 right away: 20 cents gone.
- Read the lesson: How a stock exchange actually works →
- BMV
- Bolsa Mexicana de Valores, Mexico's main stock exchange, founded in 1894 and based in Mexico City. It runs the market where shares, ETFs and government paper change hands.
- In pesos: The BMV publishes its trading hours and its holiday calendar: on those days nothing trades, whatever the app shows.
- Read the lesson: How a stock exchange actually works →
- Bond
- A loan you make to a government or company in exchange for interest. Safe government bonds compete with stocks: when they pay more, the risky stuff has to offer more too.
- In pesos: CETES are Mexico's short-term government bonds; a US Treasury is the dollar equivalent.
- Read the lesson: Why the S&P 500 goes up or down →
- Brokerage
- The regulated intermediary (casa de bolsa in Mexico) through which you buy funds, ETFs, stocks or CETES. Regulated means supervised by the CNBV, not that your investment cannot fall.
- In pesos: Most Mexican brokerages let you open an account with no minimum and buy an ETF from a few hundred pesos.
- Read the lesson: 3 common mistakes when you start investing →
- Budget
- A plan for where your money goes each month, built from real numbers. The 50/30/20 rule is the easiest starting point: needs, wants, future.
- In pesos: On $10,000 MXN net: about $5,000 for needs, $3,000 for wants and $2,000 for the emergency fund, debt or investing.
- Read the lesson: The 50/30/20 rule for your first budget →
- Buying power
- How much your brokerage account lets you spend on new purchases right now: your available cash minus what is already set aside for pending orders and fees, plus credit if the account lends. Not the same as purchasing power, which is about what inflation lets your money buy.
- In pesos: If you have $10,000 MXN in cash and a pending buy order for $4,000, your buying power is about $6,000, a little less once the fee on that order is set aside.
- Read the lesson: How a stock exchange actually works →
C
- Capex
- Capital expenditures: what a company spends on things that last for years, like stores, machines, computers or buildings. It is not counted as an expense all at once; it is spread over the years through depreciation.
- In pesos: A coffee shop that buys a $60,000 MXN espresso machine and spreads it evenly over five years records $12,000 of depreciation a year, even though the $60,000 left its account on day one.
- Read the lesson: What you actually buy when you buy a share →
- CAT (total annual cost)
- Costo Anual Total: the standardized measure in Mexico of what a credit really costs per year, fees included. Banxico requires it to be shown so you can compare offers.
- In pesos: A card with 38% interest but a CAT of 60% is charging you a lot in fees on top of the rate. And the CAT is always quoted sin IVA: the tax on the interest rides on top of it.
- Read the lesson: Your first credit card (and how not to wreck yourself) →
- CETES
- Certificados de la Tesorería: short-term debt of the Mexican government, the safest peso instrument. You can buy them from $100 MXN through cetesdirecto.
- In pesos: Parking $10,000 MXN in 28-day CETES at 7% earns about $58 a month, roughly in line with Banxico's rate.
- Read the lesson: 3 common mistakes when you start investing →
- CNBV
- Comisión Nacional Bancaria y de Valores, the regulator that authorizes and supervises banks, brokerages and exchanges in Mexico. Regulated means supervised, not that your investment cannot fall.
- In pesos: Before opening an account anywhere, check the firm is registered with the CNBV. It takes two minutes.
- Read the lesson: How a stock exchange actually works →
- Compound interest
- Interest earned on your money and on the interest it already produced. It grows slowly at first and then accelerates; it works the same way against you on a credit card.
- In pesos: $10,000 MXN at 10% compounded yearly is about $67,000 after 20 years, more than double the simple-interest version.
- Read the lesson: Simple vs. compound interest →
- Compounding period
- How often interest is added to the balance so it starts earning interest itself: yearly, monthly, daily. More often means slightly faster growth.
- In pesos: $1,000 MXN a month at 8% compounded monthly for 20 years ends near $589,000, of which $240,000 came from you.
- Read the lesson: Simple vs. compound interest →
- Credit bureau
- The company that stores your credit history and sells it to lenders. In Mexico, Buró de Crédito. You are entitled to your own report free once every twelve months.
- In pesos: Asking for your own report costs nothing once a year and does not hurt your record.
- Read the lesson: Your first credit card (and how not to wreck yourself) →
- Credit history
- The record of what you have borrowed and how you paid it, kept by credit bureaus. It is what a bank reads before lending you money for a car, a flat or a business.
- In pesos: Two years of paying a small card in full is worth more at 22 than never having borrowed at all.
- Read the lesson: Your first credit card (and how not to wreck yourself) →
- Credit limit
- The most the bank lets you owe on that card at any moment. It is a ceiling, not a budget, and using a big share of it every month is read as a warning sign.
- In pesos: A $30,000 MXN limit does not mean you can afford $30,000: it means the bank will let you owe that much.
- Read the lesson: Your first credit card (and how not to wreck yourself) →
D
- DCF (discounted cash flow)
- A way to value a company by estimating the cash it will generate in the coming years and converting each of those amounts into what it is worth today with a discount rate. The result is only as good as its assumptions.
- In pesos: If a business will hand you $110 MXN a year from now and you could earn 10% elsewhere, that $110 is worth $100 today. A DCF does that same calculation year after year.
- Read the lesson: What you actually buy when you buy a share →
- Depreciation (currency)
- When a currency loses value against another, so you need more of it to buy the same dollar. The number on the chart goes up.
- In pesos: If USD/MXN goes from 18.00 to 19.00, the peso depreciated: the same dollar now costs one peso more.
- Read the lesson: What it means when the peso weakens →
- Diversification
- Owning many different things so no single one can sink you. If two companies out of 500 go bankrupt, you barely notice.
- In pesos: $20,000 MXN in one stock can go to zero; the same $20,000 across 500 companies cannot.
- Read the lesson: Why the S&P 500 goes up or down →
- Dividend
- A slice of a company's profits paid out in cash to its shareholders, usually every quarter. Nobody is obliged to pay one, and companies that are growing fast often choose not to.
- In pesos: A share that costs $100 MXN and pays $3 a year in dividends yields 3 % — before the price moves at all.
- Read the lesson: What you actually buy when you buy a share →
E
- Earnings (profits)
- What a company has left after paying all its costs. Share prices move on what investors expect future earnings to be, not on last quarter.
- In pesos: A company can report record profits and fall 8% the same day because the market expected even more.
- Read the lesson: Why the S&P 500 goes up or down →
- EBITDA
- Earnings before interest, taxes, depreciation and amortization: operating income with depreciation and amortization added back. It shows what the business generates before its debt, its taxes and the wear of its assets. It is not cash in the bank.
- In pesos: A taco stand that sells $100,000 MXN in a year, pays $70,000 for ingredients, rent and wages, and writes off $5,000 for the wear of its grill has an operating income of $25,000 and an EBITDA of $30,000.
- Read the lesson: What you actually buy when you buy a share →
- Emergency fund
- Three to six months of essential expenses, in something liquid and separate from the account you spend from. It is what keeps one bad month from becoming debt.
- In pesos: If your essentials are $8,000 MXN a month, the target is $24,000–$48,000, built a little at a time.
- Read the lesson: The 50/30/20 rule for your first budget →
- Emerging markets
- Economies like Mexico, Brazil or India: growing, but with currencies and markets that swing more than those of the US or Europe.
- In pesos: The peso is one of the most traded emerging currencies, which is why it reacts to global news so fast.
- Read the lesson: What it means when the peso weakens →
- Enterprise value (EV)
- What the whole business is worth to everyone with a claim on it: the market value of its shares plus its debt, minus its cash. It lets you compare companies that are financed differently.
- In pesos: Buying a stand valued at $500,000 MXN that owes $100,000 to the bank and has $50,000 in the register really costs you $550,000: you take on the debt and keep the cash.
- Read the lesson: What you actually buy when you buy a share →
- Equity risk premium
- The extra return investors demand for holding stocks instead of the risk-free asset. It can't be observed directly: it is estimated, and each source estimates it its own way, so it should always come with its source and its date.
- In pesos: If the risk-free rate were 9% and you demanded a 5-point premium, you would ask an average stock for 14% a year before it is worth the risk.
- Read the lesson: What you actually buy when you buy a share →
- ETF
- Exchange-traded fund: a basket of many assets (often a whole index) that trades like a single share. Cheap, diversified and the usual first investment.
- In pesos: Instead of picking one stock, $5,000 MXN in an S&P 500 ETF buys a sliver of 500 companies at once.
- Read the lesson: ETFs: five hundred companies in one go →
- Ex-dividend date
- The first day a share trades without the right to the next dividend. If you buy on that day or later, the dividend goes to whoever sold it to you; to collect it you have to own the share before. On that day, all else equal, the price tends to open lower by roughly the dividend.
- In pesos: If a $100 MXN share will pay a $2 dividend, buying it the day before the ex-date gets you the $2; buying it on the ex-date does not, but all else equal you would pay around $98. In a simulator that pays no dividends, that drop is simply lost.
- Read the lesson: What you actually buy when you buy a share →
- Exchange rate
- The price of one currency in another. USD/MXN 18.40 means one dollar costs 18.40 pesos.
- In pesos: A $20 USD subscription at 18.40 is $368 MXN; at 19.00 it becomes $380 MXN for the same thing.
- Read the lesson: What it means when the peso weakens →
- Exchangeable share
- A share issued by a subsidiary of a company, often in cross-border deals so the original owners can defer taxes, that can be swapped for a common share of the parent, usually one for one. Economically it counts as a common share, so it belongs in the share count.
- In pesos: If a company has 100 common shares and 5 exchangeable ones, the business is split into 105 pieces: dividing its value by 100 would overstate each share by 5%.
- Read the lesson: What you actually buy when you buy a share →
- Expense ratio
- What a fund charges you every year, as a percentage of what you have invested. It is taken out of the fund automatically, so you never see the charge — which is exactly why it deserves a look.
- In pesos: 0.25 % a year on $50,000 MXN is $125. Over thirty years, small percentages stop being small.
- Read the lesson: ETFs: five hundred companies in one go →
- Expensive debt
- Anything charging roughly 20% a year or more: credit cards, store cards, payday-style loans. Paying it off is a guaranteed return no investment matches.
- In pesos: Paying off a $10,000 MXN card at 45% saves you $5,220 a year for certain — the interest plus its 16% IVA; no ETF promises that.
- Read the lesson: 3 common mistakes when you start investing →
F
- Fee
- What a bank, fund or app charges you for managing your money, usually a percentage per year. Small-looking fees compound against you over decades.
- In pesos: A 2% annual fee on $100,000 MXN is $2,000 a year; over 20 years it quietly takes about a third of what you would have ended with, and over 30 more than four pesos out of every ten.
- Read the lesson: 3 common mistakes when you start investing →
- Floating exchange rate
- A system where the market sets the price of the currency through buying and selling, instead of a government fixing it. Mexico has had one since 1994.
- In pesos: Nobody decides each morning that the dollar is worth 18.40: millions of orders from companies, banks and travelers do.
- Read the lesson: What it means when the peso weakens →
- Free cash flow
- The cash a company's operations bring in, minus what it spends on fixed assets (capex). It is the money left to pay debt, pay dividends, buy back shares or keep.
- In pesos: If your stand's operations bring in $30,000 MXN in cash this year and you spend $12,000 on a new grill, your free cash flow is $18,000: that is what the business could actually hand you.
- Read the lesson: What you actually buy when you buy a share →
G
- Gross margin
- The share of each sale left after paying for what was sold (materials, merchandise, making it), before rent, wages and every other expense. Gross profit divided by revenue.
- In pesos: A hoodie that sells for $1,000 MXN and costs $400 to make has a gross margin of 60%: $600 of every $1,000 remain to pay for everything else.
- Read the lesson: What you actually buy when you buy a share →
- Guidance
- The forecast a company publishes about its own upcoming results (sales, earnings per share, margins), usually as a range. It is the company's word, not a fact: it gets revised, and the market reacts as much to the change as to the number.
- In pesos: If a company says it will sell between $100 and $110 million pesos this year and later cuts that to between $90 and $95 million, its shares can fall on the day of the cut even if the quarter itself went well.
- Read the lesson: What you actually buy when you buy a share →
H
- Hedge
- Something you hold to protect yourself from a specific risk, not to make money. Cash dollars hedge you against peso depreciation, but pay nothing.
- In pesos: If your tuition is in dollars, holding some dollars is a hedge: if the peso weakens, that part of your money weakens with it.
- Read the lesson: What it means when the peso weakens →
I
- Index fund
- A fund that simply copies an index instead of trying to beat it. Very low fees, because there is no manager picking stocks; over long stretches most active strategies fail to beat it.
- In pesos: A 0.1% fee instead of 2% on $100,000 MXN is $100 a year instead of $2,000.
- Read the lesson: ETFs: five hundred companies in one go →
- Inflation
- A general rise in prices over time, which means the same money buys less. Measured with a basket of typical household spending.
- In pesos: With 5% inflation, what cost $100 MXN this year costs about $105 next year; your $100 bill did not change, its power did.
- Read the lesson: What inflation is, and how it hits you →
- Inflation expectations
- What people and companies believe prices will do next year. If everyone expects 6%, they raise prices and wages to match, which makes it happen. Central banks watch this closely.
- In pesos: If your landlord expects 6% inflation, the rent renewal comes with a 6% bump before anything actually rose.
- Read the lesson: What inflation is, and how it hits you →
- INPC (consumer price index)
- Índice Nacional de Precios al Consumidor: the index INEGI publishes twice a month that tracks the price of a basket of goods and services. Its yearly change is Mexico's inflation rate.
- In pesos: When the news says “inflation was 4.2%”, it means the INPC is 4.2% higher than twelve months ago.
- Read the lesson: What inflation is, and how it hits you →
- Interest rate
- What it costs to borrow money, or what you earn for lending it, expressed as a percentage per year.
- In pesos: At 10% a year, $10,000 MXN earns $1,000 in twelve months; at 45%, a credit card charges $4,500 on the same amount.
- Read the lesson: Simple vs. compound interest →
- IPO
- The first time a company sells its shares to the public, on the primary market. That is the one moment the money goes to the company; after that, shares change hands between investors.
- In pesos: When you buy Apple shares today, not one peso reaches Apple: you are buying from another investor.
- Read the lesson: How a stock exchange actually works →
- Issuer (listed company)
- A company whose shares or bonds trade on an exchange. Being listed means publishing audited results on a fixed calendar, which is the price of using other people's money.
- In pesos: Every issuer on the BMV has to publish its quarterly results, and anyone can read them for free.
- Read the lesson: How a stock exchange actually works →
L
- Limit order
- An instruction to buy only up to a maximum price, or to sell only down to a minimum price. It fills at the price you chose or a better one, or it does not fill at all.
- In pesos: A limit order to buy at $50 MXN will never pay $50.40: if nobody sells at $50 or less, the order waits and, depending on how long you set it to last, it may expire without filling.
- Read the lesson: How a stock exchange actually works →
- Liquidity
- How fast you can turn something into cash without losing value. A checking account is liquid; an apartment is not.
- In pesos: An emergency fund must be liquid: $15,000 MXN you can withdraw tomorrow, not a plazo fijo locked for a year.
- Read the lesson: The 50/30/20 rule for your first budget →
M
- Market capitalization
- What the market says a whole company is worth: price per share times number of shares. It is the honest way to compare two companies, because a share price on its own says nothing about size.
- In pesos: A $500 MXN share is not more expensive than a $50 one: it depends on how many shares there are.
- Read the lesson: What you actually buy when you buy a share →
- Market maker
- A participant that quotes a buy price and a sell price at the same time, so there is always someone on the other side. It earns the gap between the two.
- In pesos: Thanks to market makers, your $2,000 MXN order finds a counterparty in a second instead of waiting for a matching human.
- Read the lesson: How a stock exchange actually works →
- Market order
- An instruction to buy or sell right away at whatever price is available. It fills immediately, but you only find out the exact price afterwards.
- In pesos: You send a market order for 10 shares you saw at $50 MXN; if the best seller is now asking $50.40, you pay $504 instead of $500.
- Read the lesson: How a stock exchange actually works →
- Market-cap weighting
- The bigger the company, the more it weighs in the index. A handful of giant tech companies can move the S&P 500 on their own; company number 400 is almost invisible.
- In pesos: If Apple falls 3% it can drag the whole index while 300 smaller companies rise.
- Read the lesson: Why the S&P 500 goes up or down →
- Minimum payment
- The smallest amount you can pay on a card without falling into default. In Mexico Banxico sets the formula — the greater of 1.5% of what you owe plus the period's interest with its IVA, or 1.25% of your limit — so each minimum payment chips at least something off the principal.
- In pesos: On a $10,000 MXN balance at 45% the minimum is $585: $435 of interest and its IVA, and $150 that actually lowers the debt.
- Read the lesson: Your first credit card (and how not to wreck yourself) →
- Money-market fund
- A fund that holds very short-term, very safe debt (like CETES) and lets you withdraw in a day or two. Boring on purpose; built for money you might need soon.
- In pesos: Your emergency fund of $30,000 MXN sits here earning close to the reference rate instead of 0% in checking.
- Read the lesson: 3 common mistakes when you start investing →
N
- Nominal vs. real
- Nominal is the number written on the paycheck or the account; real is what that number buys once you subtract inflation.
- In pesos: A 4% raise with 5% inflation is a nominal raise and a real pay cut of about 1%.
- Read the lesson: What inflation is, and how it hits you →
O
- Operating margin
- The share of each sale left after all the costs of running the business (what was sold, rent, wages, marketing) but before interest and taxes. Operating income divided by revenue.
- In pesos: If a hoodie shop sells $100,000 MXN and keeps $15,000 after paying for merchandise, rent and wages, its operating margin is 15%.
- Read the lesson: What you actually buy when you buy a share →
P
- Purchasing power
- How much stuff a given amount of money can buy. Inflation erodes it; a raise only protects it if it beats inflation.
- In pesos: $500 MXN that bought ten tacos-and-soda lunches five years ago may buy seven today.
- Read the lesson: What inflation is, and how it hits you →
R
- Real return
- Your return after subtracting inflation: what you actually gained in purchasing power. It is the only number worth comparing.
- In pesos: A savings account paying 4% while prices rise 5% has a real return of about −1%: the number grows and what it buys shrinks.
- Read the lesson: What inflation is, and how it hits you →
- Reference rate
- The interest rate a central bank sets as the anchor for all other rates in the economy. Banxico's is a one-day target; the Fed's is a range.
- In pesos: When Banxico sits at 6–7%, a peso savings account near 6% is normal; near 0% means someone is keeping the difference.
- Read the lesson: What inflation is, and how it hits you →
- Remittances
- Money that people working abroad send home. For Mexico they are tens of billions of dollars a year, converted into pesos, which supports the currency.
- In pesos: $300 USD sent home at 18.40 become $5,520 MXN; at 17.00, only $5,100 — the family feels the rate directly.
- Read the lesson: What it means when the peso weakens →
- Return
- What an investment earns you, as a percentage of what you put in, over a period. Includes price changes and any interest or dividends.
- In pesos: You put $10,000 MXN in an ETF and a year later it is worth $10,800: an 8% return, before fees and inflation.
- Read the lesson: 3 common mistakes when you start investing →
- Revolving credit
- Credit you can use, pay back and use again without asking for it twice, up to a limit. A credit card is the everyday example: what you do not pay off rolls over and starts charging interest.
- In pesos: With a $20,000 MXN limit you can spend $8,000, pay $3,000 and keep $12,000 available — while the $5,000 left over earns interest against you.
- Read the lesson: Your first credit card (and how not to wreck yourself) →
- Risk appetite
- How willing investors are to hold risky assets. When it drops, money runs to the dollar and safe bonds; emerging currencies like the peso get sold first.
- In pesos: A crisis on the other side of the world can push USD/MXN up 50 centavos in a day without anything changing in Mexico.
- Read the lesson: What it means when the peso weakens →
- Risk-free rate
- The return on an investment considered practically certain to pay you back: in practice, government debt in its own currency, such as US Treasury bonds for dollars or CETES and Mexican government bonds for pesos. It is the floor every riskier investment is measured against.
- In pesos: If CETES paid, say, 10% a year, a stock you expect to return 11% would be paying you just 1 extra point for all its risk.
- Read the lesson: What you actually buy when you buy a share →
- Rule of 72
- A mental shortcut: divide 72 by the annual rate and you get roughly how many years it takes to double your money. Approximate, and enough to sanity-check promises.
- In pesos: At 8%, money doubles in about 9 years; someone promising to double it in 1 year is implying 72% a year.
- Read the lesson: Simple vs. compound interest →
S
- S&P 500
- An index of about 500 of the largest listed companies in the United States, weighted by size. When someone says “the market went up”, they usually mean this.
- In pesos: An ETF that tracks it (like SPY) lets you own a slice of all 500 with a few thousand pesos through a regulated brokerage.
- Read the lesson: Why the S&P 500 goes up or down →
- S&P/BMV IPC
- The reference index of the Mexican stock market: the 35 most traded companies on the BMV, weighted by size. It is to Mexico roughly what the S&P 500 is to the United States, with far fewer names.
- In pesos: Buying an IPC ETF means owning a slice of 35 Mexican companies with one order, in pesos, with no currency risk on top.
- Read the lesson: ETFs: five hundred companies in one go →
- Share (stock)
- A small piece of ownership in a company: a claim on its future profits. Its price moves with what people expect those profits to be.
- In pesos: One share of a company at $150 USD is about $2,760 MXN at 18.40; you then move with the company and with the peso.
- Read the lesson: What you actually buy when you buy a share →
- Share buyback
- When a company uses its own cash to buy its shares in the market. With fewer shares left, each remaining one owns a slightly bigger slice of the business. It is another way, besides dividends, to return money to shareholders.
- In pesos: If a company split into 100 shares buys back 10, each of the 90 left owns 1/90 of the business instead of 1/100: your slice grew without you buying anything.
- Read the lesson: What you actually buy when you buy a share →
- Short selling
- Selling shares you borrowed, hoping to buy them back cheaper later and return them. You win if the price falls, and the possible loss has no ceiling because a price can keep rising. Some simulators and contests do not allow it: read their rules.
- In pesos: You borrow and sell 10 shares at $100 MXN ($1,000). If they drop to $80, you buy them back for $800 and keep $200; if they climb to $150, getting them back costs $1,500 and you lose $500.
- Read the lesson: How a stock exchange actually works →
- Simple interest
- Interest calculated only on the original amount, never on the interest already earned. It grows in a straight line.
- In pesos: $10,000 MXN at 10% simple interest earns $1,000 every year: $30,000 after 20 years.
- Read the lesson: Simple vs. compound interest →
- Stock index
- A single number that summarizes the prices of a group of companies, so you can see how “the market” did without checking each stock. S&P 500, Nasdaq 100 and Mexico's IPC are indexes.
- In pesos: You cannot buy an index directly; you buy a fund or ETF that copies it.
- Read the lesson: Why the S&P 500 goes up or down →
T
- T+2 settlement
- Settlement is when a trade is actually completed: the money and the shares change hands. T+2 means it happens two business days after the trade date (T). Each market sets its own cycle (T+1, T+2…), so check which one applies to what you trade.
- In pesos: If you sell shares on a Monday in a market that settles T+2, the pesos from that sale are fully yours on Wednesday, as long as there is no holiday in between.
- Read the lesson: How a stock exchange actually works →
- Take-home pay
- The money that actually lands in your account after taxes (ISR), social security (IMSS) and anything else withheld. A budget starts from this number, never from the gross salary.
- In pesos: A $15,000 MXN gross salary can land as roughly $13,000 net; budgeting with $15,000 is how you end up short.
- Read the lesson: The 50/30/20 rule for your first budget →
- Terminal value
- In a DCF, the value of every year after the last one you project in detail, usually assuming the business grows forever at a small constant rate, or sells at a multiple. It tends to be the biggest piece of the total, so a small change in its assumptions moves the result a lot.
- In pesos: If from year six on a stand will deliver $10,000 MXN a year growing 3%, and you discount at 13%, those years are worth $10,000 ÷ (13% − 3%) = $100,000 at that point, before bringing them back to today.
- Read the lesson: What you actually buy when you buy a share →
- The Fed
- The Federal Reserve, the central bank of the United States. Its rate is the most watched in the world because it moves the dollar, and with it the peso.
- In pesos: A surprise Fed hike tends to send the dollar up against the peso the same afternoon.
- Read the lesson: What inflation is, and how it hits you →
- Time horizon
- When you will need the money. It decides where it goes: under two years, savings instruments; five years or more, investing can earn its keep.
- In pesos: A down payment you need in 18 months does not belong in stocks; retirement money at 22 does not belong in a savings account.
- Read the lesson: 3 common mistakes when you start investing →
V
- Valuation multiple
- A price divided by a measure of the business, so companies of different sizes can be compared. P/E divides the share price by earnings per share; EV/EBITDA divides enterprise value by EBITDA.
- In pesos: A stand that sells for $300,000 MXN and earns $30,000 a year costs 10 times its earnings; another one that sells for $450,000 with the same earnings costs 15 times: you pay more for each peso it makes.
- Read the lesson: What you actually buy when you buy a share →
- VIX
- The “fear index”: the size of the swing traders expect in the S&P 500 over the next 30 days. Under 20 is calm; over 30, people are nervous.
- In pesos: A VIX jump usually comes with a weaker peso the same day, because nervous money runs to the dollar.
- Read the lesson: Why the S&P 500 goes up or down →
- Volatility
- How much and how fast a price swings. High volatility means big moves both ways; it is the price of admission for higher long-term returns.
- In pesos: An investment of $10,000 MXN that can be worth $8,000 or $12,000 within a year is volatile; a CETES is not.
- Read the lesson: Why the S&P 500 goes up or down →
W
- WACC
- Weighted average cost of capital: the average return a company's lenders and shareholders demand, weighted by how much each of them puts in. In a DCF it is the discount rate.
- In pesos: If a stand is financed with $60,000 MXN from partners who expect 15% and $40,000 from a loan at 10%, its WACC, leaving taxes aside, is 13%.
- Read the lesson: What you actually buy when you buy a share →
Educational content only: not financial, investment or tax advice. The numbers are examples to understand the idea, not a forecast or a recommendation.