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Mar 23

Your ultimate financial jargon dictionary (A-G)

Reading Time: 5 mins

Do you ever feel like you need a big financial jargon dictionary? The words and phrases used in letters, bank statements, on the radio, television or within newspapers, magazines and books, can leave us scratching our heads.

Even financial journalists can get a little dizzy from the amount of vocabulary out there. That’s why we have put together your ultimate financial jargon dictionary. This guide defines the most common words you may see day to day, as well as some of the more complex terms which you may only come across occasionally.

Don’t let language daunt you. From A to Z, we’ve got you covered. Read our financial jargon dictionary.

 

A

Absolute Return: The return an asset achieves over a specified period.

Accretion: The incremental growth of assets and earnings.

Accrued Interest: Interest that has been incurred as of a specific date but has not yet been paid out.

Acquisition: When a company purchases most or all of another company’s shares to gain control of that company.

Adjustable-Rate Mortgage (ARM): A mortgage where the interest rate of repayment fluctuates.

Altcoin: Cryptocurrencies other than Bitcoin.

Annual Equivalent Rate (AER): The interest rate for a savings account or investment product that has more than one compounding period.

Annual Percentage Rate (APR): The yearly interest generated by a sum that’s charged to borrowers or paid to investors.

Annuity: An insurance contract issued with the intention of paying out invested funds in a fixed income stream.

Asset: A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.

Austerity: Economic policies a government implements to control public sector debt.

 

B

Balanced Fund: A mutual fund that typically contains a component of stocks and bonds.

Beneficiary: A person who gains or profits from something.

Bitcoin: A decentralised digital currency.

Blockchain: A database which stores information electronically in digital format.

Bond: A fixed-income instrument that represents a loan made by an investor to a borrower.

Broker: An individual or firm that acts as an intermediary between an investor and an exchange.

Budget: An estimation of income and outgoings over a specified period of time.

Buy and Hold: When an investor buys stocks and holds them for a long period regardless of the market position.

 

C

Capital: Describes anything that brings value or benefit to its owner, such as the financial assets of a business or an individual.

Capital Asset: Significant property such as homes, cars, investment properties, stocks and bonds. It may include collectibles or art.

Capital Expenditure: Funds used to buy or upgrade physical assets, such as technology or equipment.

Capital Gain: The increase in value of an asset when it is sold.

Capital Markets: Where savings and investments are channelled between suppliers and those who need them.

Cash Dividend: Money paid to stockholders as part of the corporation’s current earnings or accumulated profits.

Cash Flow: The net amount of funds and cash being transferred into and out of a company.

Check: A financial tool which directs a bank to pay a specific sum of money to a bearer.

Child Tax Credit: A tax benefit paid to taxpayers for each qualifying dependent child, designed to support families.

Collateral: An asset a lender will accept as security when giving a loan.

Commission: A service charge. Usually a percentage of an income, sale or investment.

Commodity: A basic good used in commerce.

Common Law: A number of basic, unwritten laws based on legal precedents.

Common Stock: Stock which represents ownership in a business or corporation.

Comparative Market Analysis: The estimated value of a property.

Compound Interest: The interest which builds up over time, including any interest already accumulated.

Conflict of Interest: When an individual or business becomes unreliable due to a clash between professional responsibilities and personal interest.

Consolidate: Combining all assets, investments, funds and any other financial entities.

Consumer Credit: A personal debt taken when purchasing goods and services.

Contingency: A plan put in place in case of negative events occurring in future.

Corporate Tax: A tax on the profits of a corporation.

Cost of Living: The cost of covering basic expenses such as housing, food and taxes in a certain place at a particular time.

Current Account: Represents an individual’s, businesses or even country’s incomings and outgoings.

 

D

Death Benefit: A pay-out to the beneficiary of life insurance, a will or a pension.

Death Taxes: The tax paid on a deceased’s estate. 

Debit: An increase in assets.

Debt: Money or financial assets borrowed by one party from another.

Debt Consolidation: Taking out a single loan to pay off multiple debts.

Debtor: An individual or company to which someone owes money.

Deduction: An expense taken from taxable income.

Deed: A legal, signed document, which transfers assets from one owner to another.

Default: A failure to repay a debt.

Deficit: When outgoings are greater than incomes.

Deflation: A declines in prices of goods and services.

Demand: The level of consumer desire to purchase goods and services.

Deposit: Funds used as security or collateral.

Devaluation: The deliberate lowering of the value of a country’s currency.

Digital Currency: Currency only available in digital form.

Disinflation: The temporary slowing of inflation.

Disposable Income: The amount of money an individual or household has to spend after income tax has been deducted.

Diversification: Mixing a range of different assets within an investment portfolio.

Dividend: The distribution of profits to eligible shareholders.

 

E

Earnings: The profits or money earned by a company or individual in a given time.

Economy: The inter-related production and consumption activities which determine how resources are allocated.

Embezzlement: A white-collar crime in which an individual misappropriates assets.

Entrepreneur: An individual who creates a new business.

Equity: The amount of money which would be returned to shareholders if a company’s assets were liquidated and any debt was paid off.

Estate: The valuation of all of an individual’s assets and investments.

Ethical Investing: Using your ethical preferences when choosing investments.

Execution: The completion of a sale or purchase.

Executor: An individual appointed the administer the last will and testament after death.

Expansion: When the real gross domestic product (GDP) grows for two or more consecutive quarters within a business or an economy.

Expense: The cost incurred in order to generate revenue.

Export: Goods produced in one country are sent to another to be sold.

 

F

Fee: A fixed price for a service.

Financial Advisor: An individual who provides financial guidance and advice in return for a fee.

Financial Institution: A company which deals with financial matters such as loans, investments or currency exchange.

Financial Risk: The possibility of losing money in a financial transaction such as an investment or loan.

Financial Technology (Fintech): New technology which aims to deliver financial services.

Financial Times Stock Exchange (FTSE): A financial group which provides index offerings for global markets.

Foreign Exchange (Forex, FX): A global market for exchanging currencies.

Fraud: A deceptive action which provides a gain to the perpetrator.

Free Market: An economic system with little or no government control.

Free Trade Agreement: When two or more nations have few or no barriers when it comes to imports and exports between them.

Fund: A pool of money allocated for a specific purpose.

 

G

Gain: An increase in the value of an asset.

Gift Tax: The tax paid on a high value monetary or financial gift.

Government Bond: A debt sold to investors to support government spending.

Government Grant: A financial reward given by a government.

Grace Period: A period after a payment is due that the payment may be made without penalty.

Grant: A financial reward.

Grantor: The creator of a trust who transfers reward to a trustee.

Green Fund: A fund which only invests in socially and environmentally responsible businesses.

Gross Domestic Product (GDP): The total value of the goods and services produced in a set period of time.

Guarantor: An individual appointed to pay a borrowers debt in the case they default on their payment.

 

Source: Investopedia.com

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