A -D of money speak


We kick start this weeks blog by gently easing you into the world of 'money speak', commencing with the A-D of a few simple terms and phrases.

A

ACCUMULATION FUND

The state of any superannuation fund before it begins paying a pension. The retirement benefit depends on contributions by you and employers, and the fund's investment return.

AGE PENSION

A fortnightly payment from the federal government. You must meet various criteria to qualify in part or full. Not to be confused with Account Based Pensions, which are paid from superannuation. The state of any superannuation fund before it begins paying a pension. The retirement benefit depends on contributions by you and employers, and the fund's investment return.

ANNUITY

Annuities are bought with a one- off payment and provide a fixed income for a set number of years or life. Generally your money is locked away for the period of the annuity, although some permit withdrawals or a "residual capital value". Payments may be indexed, often in line with inflation. Some annuities allow for reversionary beneficiaries, or payment of the annuity upon the death of the recipient to a qualifying family member.

ASSETS

Anything owned by you that has monetary value, from the cash in your bank account to property, bonds and stocks. It's smart to have assets in different investments - such as savings and investment accounts, property and shares - to minimise losses if one area isn't performing well.

B

BANKRUPTCY

People unable to pay their debts may formally ask to be declared bankrupt. Creditors to whom they owe money may also apply for this declaration. Bankrupts cede control of their finances to a manager and a permanent record is created on the National Personal Insolvency Index.

BONDS

A medium - to long-term investment issued by governments and some companies. They pay regular, fixed amounts of interest for the term of the bond. As they are usually low-risk, returns are commensurately lower. Invested funds (the principal) are repaid at the end of the term (maturity).

BUDGETING

Allocating money based on your expected income and expenses for a given period. if you can make budgeting a habit, you should stay out of debt, have money for incidentals and build solid savings.

C

CAPITAL

For individuals , the money or other assets owned for the purpose of investing. For a company, the funds received from owners or investors to further its business objectives .

CAPITAL GAINS

The financial gain realised from buying and then selling assets. It is essentially a profit created over time. It can be subject to capital gains tax, depending on your tax position and the type of asset.

D

DIVERSITY

A diversification strategy involves spreading your money across different asset types such as cash, fixed interest, property and shares, in the hope that if one investment loses money, the others will help make up for the loss.

DIVIDEND

A payment made by a company to shareholders. It is a share of profits based on the number of shares a person holds. A franked dividend is from profits on which tax has been paid, which translates to big savings at tax time.

Source of article: As published by moneytalk in their Magazine Edition 3 pg. 74 titled "The really simple guide to money"

Source of image: money.usnews.com

For a confidential discussion with a financial adviser about your financial circumstances, please contact us on 03 9935 5233 to set an appointment at our offices in Normanby Chambers, 430 Little Collins Street in Melbourne CBD.

This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant project disclosure statement before making any decision to purchase that financial product.


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