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K to R of money speak

In part 3 of our 4 part blog, we explore a few more terms and phrases with the K-R of money speak.
As they say, knowledge is power and that's definitely the case in the finance world. By keeping up to date with the latest economic developments, financial products and services, you will be better equipped to discuss your options with your accountant, with us (your adviser) and financial institutions.

A measure of how easy it is to turn an investment or financial product into cash. Shares, for instance, can be traded daily and are considered liquid. Property, on the other hand, can take weeks or months to sell.


The LVR is the size of a loan compared to the value of the property. The higher your LVR, the greater the risk to the lender. Avoid high-risk loans, such as one with a 90 per cent LVR, as you will incur extra costs such as lender's mortgage insurance.



The date on which a debt or investment and all outstanding interest payments must be paid in full.



Gearing is the process of borrowing money to invest in assets such as property. Negative gearing is when the cost of owning an asset is higher than the income it generates. under current ta law, this shortfall can be offset against your other income and earn you a tax refund.



Popular in mortgage finance, money in an offset account is linked to a home or investment loan. Money held in an offset account can be calculated against total debt and borrowers are charged interest on the difference.


Options give investors the right, but no the obligation, to purchase shares at a predetermined price within a set time period.


An overdraft is when you withdraw more money than you have in your bank account. You can also arrange an overdraft with your bank if you are in need of emergency cash. Extra interest is charged for as long as the account remains in overdraft and other fees may also apply.



A cash advance against your next pay. These short-term loans charge high interest rates and often very high fees, and usually must be repaid within a single pay cycle. There are many warnings about such products, as they often lead borrowers into spiralling debt traps.



It is a good idea to keep track of the quarterly earnings reports of the companies and funds you invest in. Quarterly reports tell you whether a company or funds reported profit growth matches their forecasts. If a company beats its forecast or estimate, share price tends to rise - but it's unwise to make long-term investment decisions based on a single quarter's data.



Having us, your financial advisers, help you plan for your retirement is essential. We can work with you to help increase your retirement income by investing in assets or watching your spending. Don't forget to take advantage of increased entitlements as you age, such as travel concessions and reduced council and water rates.


A home loan often used by retirees to boost their cash holdings without having to sell their home. Interest is added to the loan and does not have to be repaid until the house is sold, usually as part of a deceased estate.


Risk is the chance of an unexpected outcome. Risk tolerance is a measure of how comfortable you are with receiving bad returns from an investment. We all tolerate unexpectedly good returns but usually underestimate how we will feel about bad outcomes.

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

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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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