Investing & Personal Finance Glossary

How you split your money across different types of investments — like stocks, bonds, and cash — to balance risk and reward. For example, a young investor might keep 70% in stocks and 30% in safer bonds. Learn more →

A prolonged period when prices fall, usually by 20% or more from a recent high, and investor mood turns pessimistic. The KSE-100 dropping sharply over many months would be called a bear market. Learn more →

What a company would be worth on paper if it sold everything it owns and paid off all its debts — its assets minus its liabilities. If a firm has Rs 100 of assets and Rs 40 of debt, its book value is Rs 60. Learn more →

An account with a licensed broker that lets you buy and sell shares on a stock exchange like the PSX. In Pakistan you open one by registering with a TREC-holder broker and the CDC (Central Depository Company). Learn more →

A sustained period when prices are rising and investors feel optimistic. When the KSE-100 climbs steadily for months, the market is described as bullish. Learn more →

A chart symbol that shows a stock's open, close, high, and low price for a time period in a single shape. A green (or hollow) candle usually means the price closed higher than it opened; a red one means it closed lower. Learn more →

The profit you make when you sell an investment for more than you paid for it. Buying a PSX share at Rs 100 and selling at Rs 130 gives a Rs 30 capital gain (which may be subject to capital gains tax). Learn more →

Earning returns not just on your original money but also on the returns it has already generated, so growth speeds up over time. Rs 100,000 growing at 10% a year becomes about Rs 110,000 after year one, then earns 10% on that larger amount the next year. Learn more →

A measure of how much a company relies on borrowed money versus its owners' money, found by dividing total debt by shareholders' equity. A high ratio means more debt and more risk — and in halal screening, too much interest-based debt can make a stock non-compliant. Learn more →

Spreading your money across many different investments so one bad performer doesn't sink your whole portfolio. Owning shares in several sectors instead of just one bank is diversification. Learn more →

A share of a company's profits paid out to shareholders, usually in cash. If you own 100 shares and the company pays a Rs 5 per-share dividend, you receive Rs 500. Learn more →

Investing a fixed amount at regular intervals regardless of price, so you buy more shares when prices are low and fewer when high. Putting Rs 10,000 into an index fund every month is dollar-cost averaging. Learn more →

A company's net profit divided by its number of shares, showing how much profit each share earned. If a company makes Rs 1 billion profit and has 100 million shares, its EPS is Rs 10. Learn more →

Easily accessible savings set aside to cover unexpected costs like medical bills or job loss, so you don't have to sell investments or borrow. A common goal is three to six months of living expenses. Learn more →

A basket of many stocks or other assets bundled into one security you can buy and sell like a single share. A KMI-30 tracking ETF lets you own a slice of 30 Sharia-compliant companies in one trade. Learn more →

Studying a company's financial health — profits, debt, growth, and management — to judge whether its stock is a good long-term value. It answers 'is this a good business?' rather than just watching the price. Learn more →

Excessive uncertainty, ambiguity, or speculation in a contract, which Islam prohibits in financial dealings. It's a key reason many scholars consider gambling-like trading, and some derivatives, non-halal. Learn more →

A low-cost fund that simply tries to match a market index rather than beat it, by holding the same stocks the index does. An index fund tracking the KSE-100 rises and falls roughly in line with that index. Learn more →

The gradual rise in prices over time, which shrinks how much your money can buy. If inflation is 12% a year, Rs 100 buys noticeably less next year — one reason people invest instead of holding only cash. Learn more →

The first time a private company sells its shares to the public and lists on a stock exchange. After an IPO on the PSX, anyone with a brokerage account can buy that company's shares. Learn more →

A PSX index that includes all Sharia-compliant companies listed on the exchange, screened by Meezan Bank's methodology. It lets Muslim investors track the broad halal market, much like the KSE-100 tracks the overall market. Learn more →

An instruction to buy or sell a stock only at a specific price or better, rather than at whatever the current market price is. You might place a limit order to buy a share only if it drops to Rs 95 or below. Learn more →

The total value of a company's shares, calculated by multiplying the share price by the number of shares outstanding. A company with 100 million shares at Rs 50 each has a market cap of Rs 5 billion. Learn more →

An instruction to buy or sell a stock immediately at the best price currently available. It guarantees the trade happens quickly but not the exact price you'll get. Learn more →

A line on a chart showing a stock's average price over a recent period, smoothing out daily noise to reveal the trend. A 50-day moving average plots the average closing price of the last 50 trading days. Learn more →

A pool of money from many investors that a professional manager invests in a mix of stocks, bonds, or other assets. Pakistan also offers Islamic (Sharia-compliant) mutual funds that avoid prohibited sectors. Learn more →

What you own minus what you owe — the simplest snapshot of your overall financial health. If your assets total Rs 5 million and your debts are Rs 1 million, your net worth is Rs 4 million. Learn more →

The share price divided by earnings per share, showing how much investors pay for each rupee of a company's profit. A P/E of 10 means you pay Rs 10 for every Rs 1 of annual earnings — useful for comparing how cheap or expensive stocks are. Learn more →

The complete collection of investments you own, such as your stocks, funds, and bonds taken together. Reviewing your portfolio means looking at all your holdings as one picture. Learn more →

In halal investing, donating to charity the small portion of your returns that came from impermissible sources (like a company's interest income), to cleanse the gain. Investors calculate the haram percentage and give it away expecting no reward. Learn more →

A measure of how efficiently a company turns shareholders' money into profit, found by dividing net income by shareholders' equity. An ROE of 20% means the company earns Rs 20 of profit for every Rs 100 of owners' money. Learn more →

Interest or usury — any guaranteed, predetermined return on a loan — which is strictly forbidden in Islam. Earning fixed interest on a conventional bank deposit or loan is riba, which is why Muslims seek halal alternatives. Learn more →

How much ups-and-downs in your investments you can handle, both financially and emotionally, without panicking. Someone who would lose sleep over a 20% drop has a low risk tolerance and should hold safer assets. Learn more →

A technical indicator from 0 to 100 that signals whether a stock may be overbought or oversold. Readings above 70 often suggest it's overbought (possibly due for a fall) and below 30 oversold (possibly due for a bounce). Learn more →

The process of checking whether a stock meets Islamic rules — screening out prohibited businesses (alcohol, gambling, conventional banking) and companies with too much interest-based debt or income. Index providers like KMI apply these filters to build halal stock lists. Learn more →

Betting that a stock will fall by borrowing shares, selling them, and hoping to buy them back cheaper later. Most scholars consider it non-halal because you're selling something you don't own. Learn more →

A unit of ownership in a company — owning a share makes you a part-owner entitled to a slice of its profits and growth. Buying one Lucky Cement share means you own a tiny piece of that company. Learn more →

When a company divides its existing shares into more shares, lowering the price of each without changing the total value you hold. In a 2-for-1 split, your 100 shares at Rs 200 become 200 shares at Rs 100. Learn more →

Islamic investment certificates often called 'Islamic bonds,' but instead of paying interest they give holders a share of real assets or projects and the income they generate. They are structured to comply with Sharia by avoiding riba. Learn more →

Price levels on a chart where a stock has repeatedly stopped falling (support) or stopped rising (resistance). Traders watch these levels because prices often bounce or stall there. Learn more →

Studying price charts and trading patterns to forecast where a stock might go next, rather than examining the underlying business. It focuses on questions like 'what is the price doing?' using tools such as candlesticks and moving averages. Learn more →

The obligatory annual charity in Islam, typically 2.5% of qualifying wealth held for a lunar year, including the market value of shares you hold for investment. A Muslim with Rs 1,000,000 of zakatable stock would generally owe Rs 25,000 in zakat. Learn more →