- Asset
- Possession that has intrinsic value.
- Asset class
- A distinct category of investment such as bonds, equities or cash.
- Asset allocation
- The practice of distributing an investment across different types of investment to meet investor requirements or respond to market conditions.
- Bond
- A security issued by a company or government that usually pays a fixed income and promises to return the original capital paid for it on maturity.
- Capital
- Money used for investment.
- Capital Gains Tax
- A tax paid on the sale of chargeable asset.
- Cash
- The collective term for uninvested capital and money held on deposit.
- Compounding
- The practice of continually reinvesting investment income to create a larger pool of capital.
- Corporate Bond
- A bond issued by a company (as opposed to a government bond such as ‘gilt’).
- Coupon
- The income paid on a bond expressed as a percentage of its issue value.
- Credit rating
- An assessment of a bond issuer’s financial strength, indicating its ability to meet the payments promised on its bonds.
- Default
- A situation where a company or government is unable to meet the income or capital payments on its bonds.
- Dividend
- The slice of profits that a company pays out to its shareholders.
- Emerging market
- A developing economy, often in the early stages of applying free market principles. Can be volatile but can experience high growth rates.
- Employee share scheme
- A scheme by which an employee acquires shares in their employer.
- Equity
- Another name for an ordinary company share; the collective term for investment in shares.
- Estate
- The total value of all assets and possessions.
- Exchange Traded Fund (ETF)
- A tradeable share that tracks the value of a market index or sector.
- Fixed income/Fixed interest
- An alternative term for bonds.
- FTSE 100
- A stockmarket index that follows the overall value of the largest 100 companies traded on the UK stock market.
- Gilt
- A bond issued by the British government.
- Gross
- Income before any deductions including tax.
- High-yield bond
- Bonds with a sub-investment grade credit rating that have to pay a higher yield to compensate for the higher risk they involve.
- Income tax
- Tax payable on all forms of income, including salary, bank account interest, bond income and share dividends.
- Index
- A measure that follows the rises and falls in value in a stock market.
- Index-linked
- Any investment whose return is linked to inflation in order to keep its purchasing power.
- Individual Savings Account (ISA)
- A tax free wrapper for investments with the option of a stocks and shares and/or cash account.
- Inflation
- The tendency of the price of goods and services to rise over time, reducing the purchasing power of your money.
- Inheritance tax
- A tax paid on certain lifetime transfers and the value of an estate on death.
- Interest
- The return earned on a cash deposit or bond.
- ISA
- See Individual Savings Account.
- Laddering
- The practice of investing across different maturities of bond to create a regular stream of maturing capital and/or take advantage of different rates of interest.
- Liquidity
- Refers to how easily an investment can be bought and sold; general term for cashbased investments.
- Liquidity fund
- A fund that invests across a wide range of different cash investments in order to diversify risk and achieve an attractive yield.
- Money market fund
- Another name for a liquidity fund.
- Net
- Income after any deductions including tax.
- OEIC (Open Ended Investment Company)
- An investment fund that is very similar to a unit trust but with a more flexible structure.
- Potentially Exempt Transfer
- A lifetime transfer of value that will only be subject to tax if you die within seven years of making the transfer.
- Real returns
- The investment return you make after the effect of inflation has been taken into account.
- Risk
- The likelihood that an investment can fall in value.
- Save As You Earn (SAYE)
- An all employee share scheme that enables employees to save regular amounts with the intention of buying shares in their employer.
- Share
- A security issued by a company that gives the holder the right to vote on company issues and receive a slice of the company’s profits in the form of a dividend.
- Self Invested Personal Pension
- A flexible personal pension scheme managed on behalf of an individual that can hold a very wide range of investments.
- Unit trust
- A pooled investment fund managed by a professional fund manager. So-called because the fund is divided into units of equal size whose value tracks the performance of the underlying portfolio.
- Volatility
- The tendency for an investment's value to fluctuate.
- Yield
- The income being earned on an investment expressed as a percentage of its current value.
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