Passive investing – When you buy index-tracking funds or ETFs to match a market’s return rather than trying to beat it.
Price/earnings (P/E) ratio – The P/E ratio compares a company’s share price to the profit it makes per share. You divide today’s share price by the company’s earnings per share. A higher P/E means investors expect faster growth; a lower P/E can signal a cheaper stock. ‘Forward P/E’ simply uses profit forecasts instead of last year’s numbers.
PID (property income distribution) – A special label for dividends from UK real estate investment trusts, taxed as property income.
Platform fee – The charge you pay to use an online service that holds and administers your investments.
Portfolio – The collection of all the investments you own.
Pound-cost averaging – Investing a fixed amount at regular intervals so you buy more when prices are low and fewer when they’re high.
Price/sales ratio – Price/sales tells you how a share’s price stacks up against the company’s revenue per share. You calculate it by dividing today’s share price by revenue per share. It’s handy for young or unprofitable firms—just watch out: a company might have big sales but still struggle to turn those sales into profit.
Price/book value – This ratio shows how the market values a company compared to its net assets (assets minus liabilities). You divide the share price by net assets per share. If the result is below 1, the market price is less than the company’s accounting value—possibly a bargain. It’s often used for businesses (like banks) whose balance sheets are more stable than their annual profits.
PRIIPs – (Packaged Retail and Insurance-based Investment Products). A set of European rules that make sure certain investment and insurance products come with a short, easy-to-read summary called a Key Information Document (KID), so investors understand what they’re buying.
Prospectus – A detailed legal document that explains the terms, risks and costs of a security or fund offering.
PTM levy – A £1.50 fee on UK share trades over £10,000, paid to the Panel on Takeovers and Mergers, which regulates how company takeovers are run.
P/E expansion / compression – When the valuation multiple (price relative to earnings) of shares rises (expands) or falls (compresses).
