Investment Terms: What’s Exposure?

By: Team Stash

Published: Nov 22, 2016

• Updated: Aug 22, 2024

Exposure is anytime you are financially exposed to risk and exposed to potential reward.

What does exposure mean in finance talk?

Exposure is anytime you are financially exposed to risk and exposed to potential reward.

But to get a bit more specific — exposure is when you use your capital to purchase an ownership interest and participate in the performance of an asset.

Let’s unpack that jargon heavy sentence. It will only take a moment.

By capital, we finance folks just mean money. Ownership interest means anything you’ve got a right to, legally. (The stuff you can manage, sell, or donate.) And an asset is something you own! (i.e. a stock, bond, or ETF)

FYI: Equity exposure is the percentage of a portfolio that is made up of equity, or shares!

Written by

Team Stash

We want to turn money into a source of hope and opportunity. We teach people how to build good habits, save more and make it easy and affordable to get started investing. So far, we’ve helped over 6 million people create a more secure financial future with our expert advice and award winning investing app.