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English For The Finance Sector

Category: Business English Skills, Language Training | 2018-09-06

Financial matters can be a little complicated sometimes, so if you work in finance (or even just have something to do with finance) it is important to know certain words and terms. If you do any work in English, then this is the case even more so, and to know them in not one, but two languages.

However, if you are well versed in the financial sector, you may not need some of these terms, a refresher never hurt anyone! If you don’t know them, then read on. We’ve compiled a list of some of the most important words in finance, along with definitions to help you along your way in the financial sector.

The 20 Most Important Words in Finance

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401(k): (also called a 401(k) Plan)

A 401(k) or 401(k) plan is a retirement plan through an employer. Eligible employees can put some money from their monthly salary into their 401(k), and often their employers will match the amount. Their monthly salary will be reduced, but it’s an effective way to save for retirement.


An annuity is also used during retirement years. It is a product that is designed to grow someone’s funds, and then upon activation, to pay out a fixed amount over a fixed number of periods.


An abbreviation for “Annual Percentage Rate,” for example the annual cost of a loan (including all fees and interest). As the name suggests, it is shown as a percentage rate, rather than a currency amount.


Bankruptcy is when a person or company doesn’t have the ability to pay their debts, has to sell their assets, and is released from paying back the rest of their debt.

Bear Market

A bear market is when the stock market is on a downturn, and investors have a negative outlook on how the market will fare. Generally, the Dow Jones Industrial Average and the S&P 500 are seen as indicators of market health, and a downturn of 20% or more for more than two months in these indexes is seen as the start of a bear market.


Bull Market

A bull market is the opposite of a bear market. It is a market condition where securities rise faster than historic averages, usually due to an economic recovery or market boom.


Unfortunately this isn’t where you store some of your favorite music mixes. A CD is an abbreviation for “certificate of deposit,” which is an interest-bearing note offered by banks, savings and loans, and credit unions. It provides interest on an investor’s money, which is locked in for a certain time period.

Compound Interest

Compound interest is interest that is calculated on both the principal of a loan as well as the accumulated interest from previous periods.


Delinquency is when a borrower cannot repay a debt by the agreed term. For example, if you took out a loan for a car, and could not, or decided not to, pay your monthly payment on the loan.


A depression is a prolonged economic downturn in one or more economies, and is more serious than a recession (see below). A depression is essentially an extreme recession.


Diversification is spreading the risk of an investment by investing in a variety of ways, such as securities, commodities, or real estate. If you hear someone say that they want to “diversify their assets,” this is what they mean.


A garnishment is when a debtor’s property is seized to satisfy a debt or court ordered payment. If someone has their wages garnished, a portion of their monthly income is being taken out of their paycheck to pay a debt.


The liquidity of an asset is when it is able to be converted to cash as quickly as possible, without losing value.

Mutual Fund

A mutual fund is an investment made up of a pool of funds from a few investors who want to invest in securities (stocks, bonds, money market accounts, etc).

Net Worth

Your net worth is how much you’re worth with all of your assets added up, and your debt subtracted.

Prime Rate

The prime rate is the lowest rate of interest at which money may be borrowed commercially.


The original amount of a loan, without interest.


A recession is a decline in GDP (gross domestic product) over two or more consecutive quarters. A recession usually means that the stock market drops, unemployment goes up, the housing market declines, etc.


Stock is a proportional share of ownership of a company. You can purchase stock as an investment in a company in hopes of making moneys as time goes by.


Yield is the annual rate of return on an investment, and is shown as a percentage.






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Putting it All Together

Do you work in finance? Are there any words you use every day that didn’t make our list? Let us know in the comments below!

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