Financial terms can make managing your money feel confusing or stressful. At C&D, we’re here to help you with your financial questions every step of the way. Need-to-know jargon shouldn’t leave you in the dark. That’s why our Santa Barbara CPAs put together this guide. Curious to learn more? Take a look at the key terms below.


When your financial advisor talks with you about diversification, they are describing investing in a healthy range of asset classes. This strategy reduces risk if one of your investments loses its value.

People often misinterpret the term “diversification” as having multiple banks, brokerages, or advisors. However, relying on an unneeded range of financial resources can result in an unnecessary complicated financial life. This can also cause you to have a disjointed range of portfolio strategies that don’t support one another.

A Great Story or a Risk

Contrary to how it sounds, the phrase “a great story” doesn’t have anything to do with literature. In fact, it refers to how well a particular investment has performed in the past. If an investment has done exceptionally well before, it may be referred to as a “good” or “great” story.

Conversely, if the story isn’t great, it’s sometimes referred to as a “risk.” But that’s not always a bad thing. When financial experts explain the risks of an investment, it means there is a chance the investment will not match the expected return. However, this can include both a positive and negative surprise. There’s a good and bad side of risk. For instance, if a fund has a 5% historical return but an actual return of 10%, you’ll come out on the right side of risk.

The Market

You’ve likely heard investors or financial advisors refer to the current state of “the market.” But don’t take this term at face value. While many people refer to the market as one term, you should always clarify if you’re unsure. That’s because “the market” is really an umbrella term. It includes the stock market, the bond market, the US market, the international market, the Dow market, and more. Remember, you should not just be market-centric, as this is only one piece of the picture. Instead, you should work with your Solvang and Santa Barbara CPAs to help you achieve your overall goals.

Get to Know Your Finances | Santa Barbara CPAs on the California Central Coast

Our Santa Ynez Valley CPAs serve Santa Barbara County and the greater California Central Coast want to have open discussions and get you in-the-know so you can safely manage your finances with our team by your side. To learn more about how C&D can help you achieve your financial goals, please contact us today.