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Cut through the jargon
Asset allocation
This is the spread of investments across the asset classes.
Asset classes
The underlying investments – for example, shares, bonds, property and cash
deposits.
Bonds
These are loans made to a company (often called Corporate Bonds) or the
Government (often called Gilts).
Capital
The money you invest.
Capital growth
Any increase to your original investment after costs, charges and depreciation
have been taken into account.
Collective investment scheme
A way of pooling contributions from lots of people into a single investment
fund.
Contracts for Difference (CFD)
An agreement between two people to settle at the close of their contract the
difference between the opening and closing price of a company's share price.
Cooling off period
A cooling off
period is defined as the period of time you're allowed, after signing an
agreement, to cancel it without incurring a financial penalty. This does not
normally apply in Spain.
CNMV
Comision Nacional del Mercado del Valores is the principal financial services regulator
in Spain
and responsible for authorising investment products. A CNMV adviser can be
recommended, please click
here
Coupon
A bond's fixed rate of interest as a percentage of its nominal value.
Debt securities
Another name for a bond.
Derivatives
A right or an obligation to buy or sell another type of asset – such as a share
or a bond – to someone else at a specific date and time in the future.
Distribution Bond
A type of investment bond that provides a regular income.
DGS
Direccion General de Seguros y Fondos de
Pensions is the Spanish regulator for insurance products which can be marketed
in Spain.
Email me to be referred to an authorised adviser.
Diversification
Spreading your investments across different asset classes, or different types
of investments within an asset class.
Equities
This is another name for shares in companies.
Friendly Societies
These are similar to mutual life assurance companies but with different tax
rules.
FSA
The Financial Services Authority - the UK's financial services regulator. For a recommended adviser click here
Gearing
The use of borrowing potentially to increase the amount you get back, but can also
increase the risk.
Gilts
These are bonds issued by the Government.
Gross
Before tax has been deducted (as opposed to 'net', which is after tax has been
deducted).
High-yield bond funds
The same as bond funds but investing in higher-risk bonds that offer a higher
interest rate.
Investment or Insurance Bonds
These are pooled investments or lump-sum life-assurance investments. They can
also be called Life
Assurance Bonds and With-Profits
Bonds.
Investment Trusts
A pooled investment. The investor is buying shares in a company that invests in
other investments. The Investment Trust has shares and is quoted on the stock
exchange. It is a closed-ended fund
as there are a set number of shares available.
ISA
Individual Savings Account is a UK tax-efficient way of saving or
investing, with limits on how much you can pay in each tax year. These are not
available to UK
non-residents.
Life assurance investment
A pooled investment offered by a life assurance company.
Net asset value (NAV)
An expression used with investment trusts to mean the value of the fund's
underlying assets.
Nominal value
Sometimes called the face value; this is the cost of the bond when it is issued
and the amount you get back at the end of the term.
OEIC
Open-Ended Investment Company, this
is a type of open-ended investment fund.
PEP
Personal equity plan – a wrapper for investments. No longer available as all
PEPs have now automatically became stocks and shares ISAs.
Pooled investments
A way of putting various levels of contributions from lots of people into a
single investment fund. There are different types and they work in different
ways.
Rate of return
This is the change in the value of your investment taking into account both
income and growth.
Rating
This is a formal opinion of an organisation's investment quality and credit
risk.
Redemption date
Usually associated with gilts or bonds, it is the date (set in advance) when
the gilt or bond will be repaid by the issuing government or company and you
will receive the nominal value of the bond.
Shares
These are the stake or share in a company.
Stocks
These are often linked directly to Shares, but have
the same meaning.
Tax year
In the UK,
the tax year is from the 6thApril in one year to the 5th
April in the next year. In Spain
the fiscal year is the same as the calendar year
Unit trusts
A pooled investment, which is an open-ended
investment that gets bigger as more people invest and smaller when they take
money out.
With-profits funds
A type of fund available within a life assurance investment. The investor shares
the return from these investments and the profits and losses of the company (if
it's a mutual) or the with-profits business fund (if it's a plc).
Most Investment Advisers, including the ones that I
recommend, will be happy to cut through the jargon. Email me for a recommendation.