Financial Glossary

Annuity

A financial product that provides a guaranteed income for life or a specified term.

APR (Annual Percentage Rate)

Represents the actual yearly cost of funds over the term of a loan.

AER (Annual Equivalent Rate)

Shows what the interest rate would be if it was compounded yearly.

Assets

Anything owned that has a monetary value.

Bonds

Debt securities which are similar to IOUs.

Capital

Wealth in the form of money or property.

Capital Gains Tax

Tax on profit made from selling something at a higher price than you paid.

Cash ISA

A tax-free savings account.

Compound Interest

Interest on both the principal and also on accumulated interest.

Credit Rating

An assessment of a person’s creditworthiness based on their credit history.

Debts

Amounts of money that are owed.

Dividend

A portion of a company’s earnings paid to shareholders.

Equities

Another term for shares or stocks in a company.

ETFs (Exchange Traded Funds)

Funds that track indices but can be traded like individual stocks.

Fixed Rate

An interest rate that does not change over a specified period.

Gross Income

Income before any taxes and deductions.

Hedge Funds

Investment funds that pool capital from individuals or institutions and invest in various assets.

Inflation

The rate at which the general level of prices rise, causing purchasing power to fall.

ISA (Individual Savings Account)

A savings account with tax-free or tax-reduced returns.

Liquidity

How quickly an asset can be converted into cash.

Mortgage

A loan specifically used to purchase real estate.

Net Income

Income after taxes and deductions.

Pensions

A fund into which a sum of money is added during an employee’s employment years and from which payments are drawn to support the person’s retirement.

Portfolio

A range of investments held by a person or organization.

REITs (Real Estate Investment Trusts)

Companies that own or finance income-producing real estate in various sectors.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds) or the rights to ownership (derivatives).

Shares

Units of ownership interest in a company.

Stamp Duty Land Tax

A tax on property and land transactions.

Stocks

Equity investments that represent a share of ownership in a company.

Tax Relief

A reduction in the amount of tax that must be paid.

Trusts

A legal arrangement where assets are held by one party for the benefit of another.

Yield

Income returned on an investment.