Investor Glossary

Starting new investments can be challenging, especially for those without much experience or understanding of various concepts. The Profitus team aims to assist beginner investors by providing a glossary of essential concepts. This glossary will be regularly updated to ensure clarity for all users.

Investment Concepts:

Diversification:
Definition: Strategy involving dividing the investment amount into parts and distributing it across different investments to create a balanced and risk-protected portfolio.

Liquidity: Definition: Describes how quickly an investment can be converted into cash. Assessing liquidity is crucial before investing, especially if you anticipate needing funds in the near future.

Financial Cushion:
Definition: Reserved amount of money set aside before investing, serving as a safety net in case of unforeseen financial challenges. The size of the financial cushion varies based on individual circumstances.

Long-Term Investment:
Definition: Strategy focused on investing for an extended period, typically 5-10 years, providing greater security and lower time costs.

Short-Term Investing:
Definition: Strategy involving shorter-term investments, often lasting a few months, considered riskier and requiring more time for active management.

Active Investing:
Definition: Investment strategy involving direct and continuous involvement, requiring constant monitoring of news, analysis, and market trends.

Compound Interest:
Definition: Earnings generated on previously earned investment returns. Compound interest accelerates wealth growth, especially in long-term investments.

 

Concepts of Crowdfunding:

Crowdfunding:
Definition: Method of investment and business financing that connects businesses seeking funds with investors. Real estate is often pledged as security.

Refinancing:
Definition: Financial strategy where existing obligations are replaced with new debt offering more favorable terms for the business.

Project Ratings:
Definition: System classifying projects on risk/safety criteria for investors. Ratings range from D to A+, with higher ratings indicating lower risk.

LTV Ratio (Loan-to-Value):
Definition: Indicator showing the relationship between the loan amount and the value of pledged property. Lower LTV percentages are favorable.

Experienced Investor:
Definition: Investor with knowledge and resources to handle risks in capital markets, meeting specific criteria.

Novice Investor:
Definition: Investor with limited knowledge or experience in investment services. Subject to additional risk information and investor protection measures.

European Crowdfunding Regulation:
Definition: EU-wide legal framework requiring licensed crowdfunding service providers to meet similar legal requirements, ensuring protection for small investors.

Risk Category:
Definition: Projects grouped into risk categories based on default probability, providing investors with insights into project risks.

LTC Indicator (Loan-to-Cost):
Definition: Percentage expressing the loan-to-cost ratio, assessing whether future project income can cover the loan and interest.

Referral Program:
Definition: Program allowing existing Profitus investors to invite friends, earning bonuses for successful referrals.

Lemonway:
Definition: Regulated payment service provider offering a personal electronic wallet for investors, keeping funds separate from Profitus activities.

Primary Mortgage:
Definition: Type of loan security where the project developer pledges assets to investors in case of insolvency.
Investors are encouraged to refer to the Profitus Frequently Asked Questions (D.U.K.) for additional information and clarification.