Additional Voluntary Contributions (AVC's)Additional money paid by an individual into a pension scheme over and above his or her normal contributions, with the purpose of securing additional benefits.
Allocation RateThe proportion (%) of money that is actually invested in a fund after charges, etc has been deducted from the investment amount.
Annualised Percentage Rate (APR)APR facilitates comparison of interest rates, as it takes into account any other cost of borrowing (e.g. charges) over the term of a loan or mortgage. Lenders are required to quote the APR when promoting a lending or mortgage rate.
AnnuityA relatively safe, low-yielding investment product from which a regular income is received in return for a lump sum investment. There are many types of annuities, but they are particularly associated with retirement.
Approved Minimum Retirement Funds (AMRF)Upon retirement, up to 25% of a pension fund may be taken as a tax-free lump sum by the self-employed, proprietary directors or qualifying employed people. Then at least €63,486.90 of the remaining fund must be placed in an AMRF. This capital is not to be drawn down until the age of 75 (some exceptions apply), although investment growth may be withdrawn, and is subject to income tax.
Approved Retirement Funds (ARF)Following investment in an AMRF, the balance (or part thereof) of a pension fund may be withdrawn, subject to income tax, or may be invested in an ARF. An ARF is a fund managed by a regulated fund manager.
AssetSomething owned by an individual or company that has a financial value. Companies record assets on a balance sheet.
Asset ManagementThe management of a portfolio of assets (e.g. bonds, shares, cash, property) of an individual or company in order to maximise return on investment.
AssuranceInsurance cover for an event that is certain to happen (e.g. death), rather than an event that might happen (e.g. fire).
Capital Acquisitions Tax (CAT)CAT is taxation payable by the beneficiary of inheritance or gifts. The threshold for CAT depends on the relationship between the donor and the recipient, and the total amount received from more than one donor. CAT is payable at 20% on the balance above the threshold and is subject to self-assessment.
Capital GainThe increase in the value of an asset or investment above the original purchase cost.
Capital Gains Tax (CGT)A capital gain is realised when the asset or investment that has increased in value is sold. CGT is the taxation payable on this gain.
CommissionA fee charged as a percentage of the value of an investment by a broker or financial adviser, in return for arranging a transaction and/or providing advice.
Defined Benefit SchemeA pension scheme in which the benefits to be received upon retirement are clearly defined in the rules of the scheme e.g. 30% of final salary. Pension benefit is known from the outset.
Defined ContributionA pension scheme in which the benefits to be received upon retirement depend solely on an individual member's contributions, charges and the performance of the pension fund over time. Pension benefit is unknown until retirement age is reached.
DividendShareholders in a company may receive a share of the profits in the form of dividends, either cash or in the form of stocks/shares.
EquitiesAlso called shares or stocks, equities represent shareholding or ownership of a company.
Fixed Interest RateBanks or other lenders agree to a set rate of interest on a loan for a fixed period of time.
GearingThe ratio of equity finance and accumulated reserves to debt finance in a business, usually expressed as a percentage. The gearing ratio indicates the reliance of the business on debt.
GuarantorA person who undertakes to pay a loan in the case of failure of the person who received the loan to pay.
Independent Financial AdviserA professional who provides unbiased advice on a broad range of financial products (e.g. insurance, pensions, investments), acting in the best interest of the client, independent of the financial product provider.
InflationThe amount by which prices rise over a period of time in an economy, expressed in percentage terms.
Insurance PolicyThe document specifying the contract between an insurance company and a person whose property, life or health is insured.
Insurance PremiumThe money paid to insurance companies at specified intervals to maintain cover.
Interest-only MortgageA mortgage in which capital repayments are deferred for a specified period of time, during which only interest is repaid.
Investor Risk ProfileThe risk profile of an individual describes his or her attitude to risk.
Keyman InsuranceA type of life insurance policy to protect a business in the event of the death or incapacity of key personnel (e.g. owners, directors).
Letter of OfferA document from a bank or mortgage provider confirming the amount of finance that will be made available, together with any conditions under which the loan will be given.
LoadingA higher than normal premium is charged to cover the increased risk an individual brings to an insurance scheme due to specific factors e.g. smoking for life insurance, or age for motor insurance.
Managed FundA fund made up of a mix of investment types (bonds, equities, etc), actively managed by a fund manager. Individual investors receive 'units' relating to the amount they have invested.
Market Value Adjustment (MVA)A charge made or penalty imposed on an individual if they encash their policy before the maturity date. The purpose of this is to protect individuals who remain invested in a fund.
Memorandum and Articles of AssociationLegal documents setting out the way in which a company is to operate, including shareholders' rights and directors' powers.
No Claims BonusA reduction in insurance costs from which an individual may benefit if he or she does not make a claim on the insurance for a period of time.
Pay Related Social Insurance (PRSI)Regular contributions made by employers and most employees, depending on earnings and type of work, that pays for certain social welfare payments and benefits e.g. dental care. Employers deduct PRSI from employees' gross income on behalf of the Revenue Commissioners.
Payment ProtectionInsurance taken out when getting a loan, to ensure the loan is repaid in the case of incapacity of the individual to continue payments, for example due to illness or unemployment.
PensionAn income received after retirement. The pension may be provided by the State, or a private company or both, and is funded by contributions made by an individual and/or his or her employer and/or the State.
Pension MortgageCombines an interest-only mortgage for an investment property held in an individual's name, with a pension fund into which regular payments are made. Contributions to the pension fund are made from pre-tax income; when the pension fund matures it is used to pay off the capital borrowed.
Personal PensionA pension plan that is taken out by an individual and is transferable between jobs, so an individual can maintain the pension even when he or she changes employment. The charging structure may vary, and employers may not make contributions to this type of pension.
Personal Retirement Savings Account (PRSA)A type of individual pension designed to help people to save for retirement in a flexible manner. A PRSA is retained by the individual if he or she changes employment. If an employer does not already offer a company pension, employees must be facilitated in establishing PRSA’s. PRSA’s have a set charging structure and employers may opt to contribute to an individual's PRSA.
PortfolioThe collection of assets, investments and savings held by an individual, which may consist of a combination of shares, bonds, property and cash.
RiskThe degree of insecurity associated with investing money i.e. the possibility of losing some or all of the money invested, or not making sufficient returns. Different degrees of risk are associated with different types of investments e.g. deposit vs. hedge fund.
Risk BenefitsBenefits payable in the event of contingencies such as death in service, ill health or disability, which are not pre-funded. These risks are often insured.
SharesAlso called equities or stocks, shares represent shareholding or ownership of a company.
Stamp DutyTaxation payable on the transfer of ownership (i.e. purchase) of a property. It is calculated as a percentage of the purchase price of the property, with different rates payable by first time buyers and owner occupiers or investors.
Surrender ValueThe value of a life assurance policy if it is cancelled before its date of maturity.
Syndicated Property InvestmentAlso known as a Leveraged Property Fund, this is an alternative to buying property to let on an individual basis. Individual investors pool their resources, and this sum is then 'geared up' to allow the acquisition of a substantial property or properties, usually commercial. The property and fund are managed by experts in the field, so there is no requirement for hands-on property management by the individual investor. Return on this type of syndicated property investment can be considerable.
Term DepositA type of savings account in which a person undertakes to leave their savings for a specified period of time, or face penalties.
Tracker Variable RateAn interest rate that tracks the European Central Bank (ECB) rate, for example a mortgage rate that is 1% over the ECB rate, and rises or falls as the ECB rate does.
UnderwriterA representative of the insurance company who assesses the risk that an individual brings to an insurance scheme and sets the appropriate premium for that individual.
ValuationThe value of an individual investment or an investment portfolio at a given date.
Wealth ManagementThe planning, organising, co-ordinating and controlling of personal financial resources, including available assets such as cash, equities, long term investments, property and mortgages, business shareholding and pension funds, to achieve a set of objectives, which tend to be related to the growth, preservation or transfer of wealth, taking cognisance of applicable taxation regimes