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.
Illustration
An example of the potential growth you may expect to receive from an investment. The growth rates used are set by the industry regulator, the Financial Conduct Authority (FCA). It is important to remember that the actual return received could be higher or lower than that shown on the illustration.
Index
In the stock market, an index is a device that measures changes in the prices of a basket of shares, and represents the changes using a single figure. The purpose is to give investors an easy way to see the general direction of shares in the index. Examples of stock market indices are the FTSE 100, FTSE All-Share, Nikkei and Dow Jones.
Inflation
Inflation is the rate at which the general price level of goods and services in an economy increases over time, reducing the purchasing power of money.
Income
Money received by an individual for example as a salary or from investments which is usually subject to income tax. Cash deposits and bonds will provide income in the form of interest. Most shares will provide income in the form of dividends.
Index Fund
A fund that is managed so as to generate the same returns as a specified Index (also known as “Passive” or “Tracker” funds).
ISA (Individual Savings Account)
A savings vehicle that allows customers to invest in equities, (stocks and shares) or save cash without having to pay any income or capital gains tax.
Income Drawdown
Enables people with a certain type of pension to draw an income and/or cash lump sums from their pension fund, rather than buying an annuity and to take income direct from their pension fund.
Inheritance Tax (IHT)
Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more than a certain amount when they die. This is called the ‘Inheritance Tax threshold’.