The below is a high level overview of some of the key terms and investments that you will come across when navigating the financial markets.
A pooled investment option. The fund manager will purchase an array investments to reach a particular objective.
A measurement of a market (e.g. FTSE 100). They help investors compare performance and current pricing levels.
When the fund manager’s objective is to ‘beat the market’. They will compare their performance against a particular index.
Instead of trying to ‘beat the market’, the fund simply tracks an index.
A fund that generates a regular income for its investors (e.g. quarterly).
A fund which automatically reinvests the income generated.
Partial ownership of a company, typically a publicly traded company (e.g. Tesla).
Government/corporate debt, which pays a rate of interest for you loaning them capital. UK government bonds are known as GILTS.
Tangible material or product (e.g. oil, gold, coffee, livestock).
A distribution of profits by a company to its shareholders.
A payment from the borrower (e.g. UK government) to the lender (e.g. you).
Rate of return on an investment as a percentage. Usually calculated over 12 months.
General Investment Account (GIA)
An account where you can purchase and hold direct/indirect investments.
Individual Savings Account (ISA)
A tax-efficient account, sheltered from income and capital gains tax. There are no tax implications upon withdrawal.
Self Invested Personal Pension (SIPP)
Contributions can benefit from tax relief. Pensions have complex rules and there are tax implications upon withdrawal.
A company which allows you to hold investment accounts (e.g. Vanguard, HL, Nutmeg). They charge a platform fee.
The ‘Key Investor Information Document’ has to be produced by any fund manager who markets their fund in the EU. It does what it says on the tin.
The ongoing charge of a fund, which includes most of the charges incurred by an investor each year. There are certain costs highlighted in the KIID which are not included in the ongoing charge figure.
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