Jargon Buster
A
ABI
Association
of British Insurers, trade body through which insurance companies
can air views on matters of common concern.
Accrual Rate
The
rate at which your pension benefits build up as pensionable
service is completed in a Final Salary Scheme.
Actuary
Someone qualified to consider financial issues, particularly
ones involving probabilities such as life expectancy.
AER - Annual Equivalent Rate
The
interest paid from current, deposit or savings accounts.
AIFA - Association of Independent Financial
Advisers, industry trade body for financial advisers who
are not tied agents.
AITC
Association
of Investment Trust Companies, the industry trade body of
investment trust companies.
Analyst
Person
who studies a particular market or industry sector and makes
recommendations to investors about investing in companies'
shares.
Annual volatility
A
measure used to assess the risk of a portfolio.
Annuity
This
is the contract you purchase from an insurance company using
a lump sum of money (e.g. the proceeds of your pension fund)
to guarantee you an annual income for a period of time (e.g.
for ten years).
APR - Annual Percentage Rate
The
percentage you are charged over a year on the outstanding
balance when you borrow money or make a purchase on credit.
Assets
Anything
of value can be referred to as an asset, such as your home,
jewellery or antiques. Within investments, assets are another
word for investments in a unit trust portfolio.
AUTIF
The
Association of Unit Trusts and Investment Funds, the industry
trade body of unit trust and investment trust management
companies.
AVCs - Annual Voluntary Contributions
Extra
payments you can make in addition to your main occupational
pension scheme contributions to boost your retirement benefits.
AVCs can be paid either to your employer's scheme or to a
separate arrangement. See also FSAVCs.
B
Base rate
The
interest set by the Bank of England on which other banks
base their rates.
Basic Rate Tax
The
income tax paid on taxable income above a certain figure,
currently 22%.
Basic State Pension
The
single person's flat rate State pension paid when you reach
state pension age (60 for women, 65 for men, although set
to increase to 65 for women by 2020) if you have paid sufficient
National Insurance contributions during your working life.
Bid-offer spread
The
difference between the prices at which you buy units and
sell them back.
Bid price
The
price at which you sell units in a unit trust back to the
investment manager.
Bond
A
form of investment offered by an institution such as a building
society, insurance/investment company or the government with
the purpose of raising capital, in which the lump sum is
repaid with interest at maturity. Bonds can be bought and
sold on the stock market.
Bonus
An
extra payment that with-profits policyholders may have added
to their contract depending on the profits the company makes
in any one year, or over a period of years. |
