Guide
Investing glossary.
Even unfamiliar terms in one sentence. Jump straight to the related tool and run the numbers.
Basic metrics
PERPrice-Earnings Ratio
The stock price divided by earnings per share (EPS). It shows how many times the company's earnings the stock price represents. A lower figure is generally seen as cheaper relative to earnings, but growth and industry should be considered too.
PBRPrice-to-Book Ratio
The stock price divided by book value per share (BPS). Below 1x means the market capitalization is smaller than the net assets on the books.
ROEReturn on Equity
Net income divided by shareholders' equity. It shows how efficiently the company generated profit from shareholders' money.
EPSEarnings Per Share
Net income divided by the number of shares outstanding. It is the basis for calculating PER.
Market capitalizationMarket Capitalization
Stock price × shares outstanding. It is the price the market puts on the entire company.
Dividend yieldDividend Yield
Dividend per share divided by the stock price. When the stock price falls, the dividend yield can look higher.
Payout ratioPayout Ratio
The share of net income paid out as dividends. From 2026 it is also used in the requirements for separate taxation of high-dividend companies (40% or more, etc.).
Comprehensive Financial Income Tax & Health Insurance Checker
Trading
Average costAverage purchase price
The average purchase price of shares bought in several lots. Calculated as total purchase amount ÷ total quantity.
Averaging downAveraging Down
Buying more when the price is below your average cost in order to lower that average. The larger your position becomes, the greater the risk.
Adding to winnersPyramiding
Buying more as the price rises. Your average cost goes up, but it is a strategy of riding the trend.
Stop-lossStop Loss
Selling at a preset price to lock in a loss. A stop-loss price set in advance becomes the basis for deciding position size.
Risk-reward ratioRisk Reward Ratio
Expected gain ÷ expected loss. A risk-reward ratio of 2 means aiming for 2 while risking 1.
Breakeven gainBreakeven Gain
The gain needed to recover a loss. A −50% loss requires +100%.
Daily upper/lower price limitPrice Limit
The maximum price move allowed in a day. For Korean stocks it is ±30% from the previous close.
Tax & accounts
Capital gains tax (overseas stocks)Capital Gains Tax
A tax of 22% (including local tax) on annual net gains from selling overseas stocks, after a KRW 2.5 million deduction. You file in May of the following year.
Loss offsettingLoss Offset
Calculating tax on the combined gains and losses of a year. For overseas stocks, they are netted regardless of stock or country.
Comprehensive taxation of financial incomeComprehensive Financial Income Tax
A system under which, if interest and dividend income exceeds KRW 20 million a year, the excess is added to other income and taxed at progressive rates (6 to 45%).
Comprehensive Financial Income Tax & Health Insurance Checker
Gross-upDividend gross-up
Because dividends come from profits on which corporate tax has already been paid, under comprehensive taxation a set percentage (10% in 2026) is added to dividend income, and a dividend tax credit is then given.
Comprehensive Financial Income Tax & Health Insurance Checker
Separate taxationSeparate Taxation
A method where income is taxed separately at a set rate without being combined with other income. For financial income of KRW 20 million or less, tax ends with 15.4% withholding.
Comprehensive Financial Income Tax & Health Insurance Checker
Securities transaction taxSecurities Transaction Tax
A tax charged on the sale amount when you sell stocks. In 2026 it is 0.20% (including the Special Tax for Rural Development) for both KOSPI and KOSDAQ.
ISAIndividual Savings Account
An account where you can invest in several products in one place; if kept for 3 years or more, net gains up to KRW 2 million (KRW 4 million for the low-income type) are tax-free, and the excess is taxed separately at 9.9%.
Pension savings accountPension Savings
A retirement account that gives a tax credit of 13.2 to 16.5% on contributions of up to KRW 6 million a year. If you receive it as a pension after age 55, pension income tax of 3.3 to 5.5% applies.
IRPIndividual Retirement Pension
A retirement pension account that, combined with a pension savings account, can receive a tax credit on up to KRW 9 million a year. There is a limit on risky-asset investment (70%).
Tax deferralTax Deferral
Paying tax later when you withdraw rather than right away. In the meantime, the money that would have gone to tax keeps working for you.
Gift deductionGift Deduction
The limit you can give without gift tax. On a 10-year aggregate basis: KRW 600 million for a spouse, KRW 50 million for an adult child, KRW 20 million for a minor child.
Filing tax creditFiling Credit
A system that cuts 3% of the calculated tax if you file gift tax within the deadline (3 months from the end of the month of the gift).
Market & flows
Foreign net buyingForeign Net Buying
Foreign investors' buy amount minus their sell amount. A positive number means they bought on net.
Short sellingShort Selling
A trade where you borrow shares and sell them first, then buy them back later to repay. You profit if the stock price falls.
Margin loanMargin Loan
Borrowing money from a brokerage to buy stocks. The marketwide balance shows the level of leverage among individual investors.
Maintenance margin ratioMaintenance Ratio
The minimum percentage of the borrowed amount that the market value of shares bought on credit must stay above. Usually 140%.
Forced liquidationForced Liquidation
When collateral is insufficient or an unsettled amount cannot be paid, the brokerage forcibly sells the investor's shares.
Unsettled trading (misu)Unsettled Trading
A trade where you buy stocks by paying only the margin and pay the rest by the settlement date (T+2). If you cannot pay, the position is forcibly liquidated.
52-week high52-week High
Setting a new highest price of the past year. It is used as a momentum signal.
VIXVolatility Index
The expected 30-day volatility calculated from S&P 500 option prices. It is also called the 'fear index'.
IPO & disclosure
Demand forecastingBook Building
The process of collecting institutional investors' demand to set the IPO price. The competition rate and the share of lock-up commitments get attention.
Lock-up commitmentLock-up Commitment
A promise by an institution allocated IPO shares not to sell them for a set period (15 days to 6 months).
Lock-upLock-up
Shares of major shareholders or institutions deposited with the Korea Securities Depository so they cannot be sold for a set period. Shares may reach the market on the expiration date.
Equal allocationEqual Allocation
A method that divides IPO shares equally among all accounts that subscribed for at least the minimum unit.
Proportional allocationProportional Allocation
A method that divides IPO shares in proportion to the number of shares subscribed for (the deposit).
Paid-in capital increasePaid-in Capital Increase
A company issues new shares, receives money and increases its capital. Existing shareholders' stakes may be diluted.
Ex-rightsEx-rights
In a paid or bonus issue, the date when the right to receive new shares ends. The stock price is theoretically adjusted.
Convertible bond (CB)Convertible Bond
A bond that can be exchanged for shares at a set price (the conversion price). When converted, the number of shares increases.
Bond with warrant (BW)Bond with Warrant
A bond that comes with the right to buy new shares at a set price.
RefixingRefixing
A clause that lowers the conversion price of a CB or BW when the stock price falls. The number of shares on conversion increases, so dilution grows.
OverhangOverhang
Potential shares that could come to market as selling supply at any time. Examples include CB conversion shares and lock-up expiration shares.
Ex-dividend dateEx-dividend Date
From this day on, buyers do not receive the current dividend. In Korea it is usually one business day before the record date.
Record dateRecord Date
The date that determines which shareholders receive the dividend. Since the 2023 reform, each company can set it differently.
Products & strategy
ETFExchange-Traded Fund
A fund built to track an index or a basket of assets, bought and sold on an exchange like a stock.
Leveraged ETFLeveraged ETF
An ETF that tracks 2x or 3x the daily return of its underlying index. If held for a long time, volatility drag makes returns differ from the multiple.
Volatility dragVolatility Drag
The effect where repeated ups and downs erode returns because of compounding. It grows with greater leverage.
CAGRCompound Annual Growth Rate
A return that converts multi-year performance into 'if it had grown by the same amount every year'.
Dollar-cost averaging (DCA)Dollar Cost Averaging
Investing the same amount on set dates regularly, regardless of price.
RebalancingRebalancing
Buying and selling to bring asset weights back to their original targets when they have drifted.
4% rule4% Rule
A rule of thumb that withdrawing 4% of your retirement assets each year has a high chance of lasting 30 years or more. The target becomes 25 times your annual living expenses.
Dividend reinvestment (DRIP)Dividend Reinvestment
A method of using the dividends you receive to buy the same stock again, boosting the compounding effect.