The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

A principal is an amount of money borrowed or the amount still owed. If you were to take a loan of £25,000 from the bank, for example, the principal balance would be £25,000. For every payment you make on the loan, the principal decreases.

Principal definition

A principal is an amount of money borrowed or the amount still owed. If you were to take a loan of £25,000 from the bank, for example, the principal balance would be £25,000. For every payment you make on the loan, the principal decreases.

A principal also refers to the face value (or par value) of a debt instrument. A bond with a principal of £10,000 represents a £10,000 loan to the bond issuer, and it is usually equal to the amount the bondholder will receive on the bond’s maturity date. 

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