Glossary Of Terms

Active Fund :Active funds have managers who will actively look for the greatest return. Passive funds generally rely on the market to dictate performance.

Active fund manager :Fund managers who move investments between different assets often to get the best return for their investors. Active fund managers usually have teams that analyse all the available information and use complicated forecasting techniques to get the best performance for the funds they manage.

Adviser :A person who sells financial advice and/or products. They include financial advisers, insurance agents, planners, sharebrokers, mortgage brokers and bank managers or agents. They may be salaried, paid a commission or have an hourly rate.

Asset :An asset is something of value that can usually be converted into cash like a house or car.

Asset classes :Types of investment, e.g. shares, property, bonds,etc

Automatic payments: :Automatic payments (APs) are a way of paying someone a set amount direct from your bank account, usually on a fixed day of the month. Automatic payments are ideal for bills such as rent.

Bankruptcy :Bankruptcy is a term used to describe the inability of a person or company to pay their debts.

Break fee :A fee charged by a lender for early repayment of a mortgage, for example when you leave a fixed term mortgage early to move to a lower interest rate.

Capital gain :The profit you make when you sell an investment for more than you paid for it.A capital loss is when you sell an investment for less than you paid for it.

Capital growth :When the value of your investment (your capital) grows.

Cash advance :A cash advance is when you withdraw money from your credit card account, usually through an ATM. Cash advances are an expensive option because you get charged interest from the day you withdraw the money.

Commission :The money paid to a broker, financial adviser or planner, who sell products on behalf of a company. Commission can be based on the number or the value of the investments they sell.

Compound interest :Interest paid on interest. You earn compound interest if you have savings and don't spend the money you earn from the interest on those savings

Cover :The amount of protection your insurance gives you.

Debit :An amount taken out of your bank account to pay for something.

Debt :Debt is what you owe - it comes in many forms, including mortgages, personal loans, credit card balances, hire purchase agreements, loans from family.

Direct Debits :Direct debits (DDs) are a way of paying someone a variable amount direct from your bank account, usually on a fixed day of the month. Direct debits are ideal for bills that are a different amount each month – like telephone and power bills.

Dumb debt :High-interest debt that can easily be avoided.

Earnings :This is the money you receive from others as payment for the use of your money.

Equity :The amount you would get if you sold an asset and paid back any money you owed on it.

Estate :Everything you own at the time of your death.

Excess :The amount you agree to pay when you make an insurance claim.