Glossary

Active Fund
A type of investment fund where fund managers actively buy and sell assets to outperform the market.

AFSL (Australian Financial Services Licence)
A licence required to conduct a financial services business in Australia.

ASIC (Australian Securities and Investments Commission)
The government agency responsible for enforcing laws relating to companies, securities, and financial services in Australia to protect consumers and investors.

Asset
Anything of value that can be owned or controlled to produce financial value, such as property, shares, or cash.

Asset Classes
Categories of investments, typically including shares, property, cash, and bonds.

Balanced Fund
A multi-asset investment fund with a relatively equal split between growth and defensive assets. It is a common choice for long-term investors seeking stability.

Beneficiaries
Individuals or entities entitled to receive benefits, typically from a will, trust, or life insurance policy, upon the death of the owner.

Blue Chip Shares
Shares in large, well-established companies known for their reliability and stable performance.

Bonds
Loans made to governments or corporations in exchange for regular interest payments over a set period, with the principal repaid at the end of the term.

BPAY
A secure Australian payment service used to pay bills electronically.

Broker
A professional who buys and sells shares or other assets on behalf of clients, typically charging a commission.

Capital
Wealth in the form of money or assets, often used for investment purposes.

Capital Gain
The profit made when an asset, such as property or shares, is sold for more than its original purchase price.

Capital Gains Tax (CGT)
A tax on the profit made from selling an asset. In many cases, holding the asset for more than a year can reduce the tax owed.

Compound Interest
Interest calculated not only on the initial amount (principal) but also on any interest previously earned.

Concessional Contributions
Pre-tax contributions made into a superannuation fund, taxed at a lower rate than regular income.

Conservative Fund
A fund that invests primarily in low-risk, defensive assets such as cash and bonds, suitable for short-term investment.

Consumer Price Index (CPI)
A measure of inflation tracking the average change in prices for goods and services over time.

Credit Score
A numerical representation of your creditworthiness, used by lenders to assess the risk of lending you money.

Defensive Assets
Low-risk investments like cash, bonds, and term deposits, which offer more stability but lower returns than growth assets.

Dividends
A portion of a company’s profits paid to shareholders, usually on a regular basis.

Dollar Cost Averaging
An investment strategy where you invest a fixed amount at regular intervals, reducing the impact of market volatility.

Downturn
A decline in economic activity or market prices over a sustained period.

Emergency Fund
A savings fund set aside to cover unexpected expenses, providing a financial safety net.

Ethical Investing
Investing in companies or funds that meet certain ethical standards, such as those related to environmental or social impact.

Exchange Traded Fund (ETF)
A type of investment fund that holds a collection of assets, such as stocks or bonds, and is traded on stock exchanges like a share.

Financial Adviser
A professional licensed to provide advice on financial matters such as investments, insurance, and retirement planning.

Franking Credit
A tax credit passed on to shareholders along with dividends, representing the tax already paid by the company.

Growth Assets
Higher-risk investments like shares and property that offer the potential for higher returns over the long term.

Guarantor
Someone who agrees to repay a loan if the borrower is unable to do so.

High Growth Fund
An investment option focused heavily on growth assets like shares, designed for long-term investors seeking higher returns.

Income Protection Insurance
An insurance policy that provides a percentage of your income if you’re unable to work due to illness or injury.

Index Fund
A type of passive investment fund designed to track the performance of a specific market index, such as the FTSE 100.

Inflation
The rate at which the general level of prices for goods and services increases, eroding the purchasing power of money.

Interest
The cost of borrowing money, or the return earned on savings or investments, usually expressed as a percentage.

Life Insurance
A policy that pays a lump sum to your beneficiaries in the event of your death.

Managed Investment Fund
A pool of money from multiple investors managed by a professional, who makes decisions on how to invest the funds.

Mortgage
A loan used to purchase property, where the property itself serves as collateral for the loan.

Negative Gearing
A strategy where the costs of owning an investment, such as loan interest, exceed the income generated, often for tax benefits.

Net Worth
The total value of an individual’s assets minus their liabilities, giving an overall picture of financial health.

Non-Concessional Contributions
Contributions made into a superannuation fund from after-tax income.

Overdraft
A facility allowing you to withdraw more money than you have in your bank account, up to a set limit, often with interest charged.

Pension
A regular payment made during retirement, typically funded by the government or private contributions during one’s working life.

Power of Attorney
A legal document that grants someone the authority to make decisions on your behalf, typically regarding finances or property.

Risk Profile
A measurement of an individual’s tolerance for risk, used to determine the most suitable investments.

Salary Sacrifice
A strategy where you agree to forgo part of your salary, which is instead contributed to your superannuation account pre-tax.

Self-Managed Super Fund (SMSF)
A type of superannuation fund where you control how the funds are invested, often chosen for greater flexibility.

Shares
Units of ownership in a company, entitling the holder to a portion of the profits, usually through dividends.

Superannuation
A government-mandated savings system in Australia to help individuals accumulate funds for retirement in a tax-effective way.

Term Deposit
A fixed-term investment where money is deposited in a bank for a set period, earning a guaranteed interest rate.

Trust Fund
A legal entity holding assets such as money or property for the benefit of another individual or group.

Will
A legal document that outlines how a person’s estate should be distributed after their death.