Financial Glossary
Key terms explained in plain English, no jargon, no complexity. We appreciate our industry uses a lot of financial ‘jargon’, which can make it difficult to decipher information and correspondence. In order to try to assist with this, we have created a glossary of many of the terms you may come across. If you would like further clarification on any of the definitions, or cannot find a particular term, we would be happy to assist further.
Capital Gains Tax (CGT)
A tax on the profit realised when you sell an asset that has increased in value. Current rates and the annual exempt amount depend on your income tax band and the nature of the asset disposed of.
Consumer Prices Index (CPI)
Consumer Prices Index (CPI)
Measures the prices of a Fixed “basket of goods” bought by a typical consumer. Used as a measurement of inflation.
Collective / Pooled Investments
Investments such as unit trusts, where a number of people put their money together to enable them to buy a wider range of investments, thereby spreading the risk of volatility.
Credit Rating
Formal evaluation of a company’s loan repayment history and current ability to repay its financial liabilities. Awarded by agencies such as Standard & Poor’s and Moody’s. AAA grade is the highest.
Compound Growth
The process by which investment returns generate their own returns over time. Often described as "interest on interest," compounding significantly accelerates wealth accumulation over longer investment horizons.
Cashflow Modelling
A financial planning technique that projects future income, expenditure and investment returns to help assess whether your assets are likely to sustain your desired lifestyle throughout retirement and beyond.