Finance Glossary



Australian Accounting Standards Board


Auditing and Assurance Standards Board


Australian Bureau of Statistics


Australian Competition and Consumer Commission

Account based pension
A regular payment made by the Australian government to people of or above the official retirement age, or due to a qualification such as armed services membership or a disability.
Accumulation fund

A superranuation fund defined by the contributions you and your employer make, as well as the investment returns from the fund. As opposed to a defined benefit fund.

Acquisition Cost

The total cost of net commission and operating expenses required to generate a net earned premium (insurance policy).

Active investment management

The active trading of investments to increase the return on investment.


A skilled mathematician used to evaluate risk, design appropriate insurance cover, and advise as to appropriate reserves required to meet potential claims. 

Australian Financial Security Authority
After-tax super contribution

Contributions made to a super fund after tax has been paid on the contribution. As opposed to pre-tax contributions.


A representative from an insurance company, who's role is to negotiate contracts of insurance service with a buyer.

Aggressive investment mix

An investment portfolio aiming for high returns based on short-term risk and volatility. Usually consisting of assets such as shares and property.

Annual percentage rate (APR)

The rate of interest charged to the borrower, exclusing expenses. Most accounts and mortgages will have multiple APR's for different circumstances.


An investment. Purchased in full with a lump sum, that is normally paid back with agreed interest or benefits over a set period of time.


Australian Office of Financial Management


Australian Prudential Regulation Authority


Australian Reinsurance Pool Corporation

Australian Small Business and Family Enterprise Ombudsman

Australian Securities and Investments Commission


A person employed by the insurer who checks a claim against its policy and approves/denies claims.


Something that an individual or company owns. Good examples include cash, shares or property.

Asset manager

A person or company who is delegated responsibility to manage an investment on behalf of the investor.


Australian Securities Exchange


Australian Taxation Office

Australian Transaction Reports and Analysis Centre
Australian Financial Services Licence (AFSL)

The ASIC granted licence that allows people or companies to deal with, buy, sell and advise in financial products.


The Australian set of standards that set out minimum wages and conditions for employees.


Balanced fund

A fund invested across a relatively even mix of asset classes to achieve long term capital growth with relatively low risk.

Bank bill swap rate (BBSW)

The benchmark interest rate that Australian banks use to lend to each other for a set period (usually 6 months or less).


The process used where an individual can declare themselves legally unable to meet their debt obligations.

Bare Trust

A trust arrangement seperate from an SMSF itself, where a custodian holds assets purchased by an SMSF. See custody trust. 


An index with which to compare performance of an investment against. eg. the ASX 200 is an index of performance of the top 200 companies listed on the ASX.


The immediate and absolute individual entitled to recieve a benefit. Whilst there may be many members of a trust - the beneficiary relates only to specific benefits outlined in the deed.

Blue chip share

A share of a company considered safe and a good investment. Generally describing a well established, stable company that has consistently generated good earnings over a long period of time.


A long term, lump sum investment which pays a regular, set interest amount for the term of the investment and the initial investment amount in full at the maturity of the term.

Broker (insurance)

A representative who negotiates contracts of insurance service on behalf of the insured party - or purchaser of insurance.

Broker (mortgage)

A representative who negotiates a mortgage on behalf of both the buyer and a mortgage provider, for a fee or commission.


A fee charged by a broker.

Building society

A financial institution that offers banking services in the same way a bank does - but is community or member based and run, rather than a private company.


Capital (Company)

The funds raised from owners and investors to grow the business and its objectives.

Capital (individual)

The money and other assets an individual owns for the purpose of investing.

Capital depreciation

A drop in value of a capital asset. eg. An employees work laptop depreciates in value over the course of its use.

Capital gain

The positive difference between the initial cost of an asset and its sale price (including all costs).

Capital gains tax
A tax imposed on the profits made from buying or selling particular assets.
Capital growth

The positive difference between the initial cost of an asset and its sale price (including all costs). See Capital gain.

Capital stable fund

A fund designed for stability and moderate long term growth. Usually significantly invested in defensive assets.

Cash rate

The interest rate set by the RBA, charged on overnight loans between banks. This rate is set to control monetary policy.

Casualty Insurance

Insurance regarding injuries to third parties on the policyholders property. Examples include workers' compensation, public liablility and auto insurance


An interest or stake in a property. For instance, many properties with sewer lines running through them have a caveat from water authorities on the title of the property, protecting access to and management of the sewer.


A practice used by brokers to move a customer from one financial product to another purely for the purpose of generating a fee or commission.


The amount payable to the insured policy holder in cover of a loss from an insured event.


The property or assets that individuals offer as security for a loan. Defaulting on the loan may require selling or liquidating collateral in order to pay the loan amount.

Commercial lines

Insurance relating to businesses, professionals and commercial establishments.

Commission (insurance)

The percentage fee paid to a an agent or broker as measured against the policy premium. This fee varies depending on the insurance level or coverage, the insurer themselves and relevant marketing involved.

Commission ratio

Net commission expense expressed as a percentage of the net earned premium of the policy.


The process of converting a pension or annuity into a lump sum.

Comparison rate

A commonly used rate to calculate the true cost of a loan that includes all costs involved in a loan beyond the interest rate such as fees, charges and setup costs. Expressed as a percentage figure.


The amount a policy holder recieves as a result of a loss and resultant claim against a policy.

Compound interest

The accumulated interest paid on the initial principal of an investment. 

Comprehensive insurance

An insurance policy that covers the policy holder for most circumstances.

Concessional super contributions

The payments into a super fund from pre-tax income. They include compulsory super guarantee (SG) contributions. Concessional super contributions are taxed at the standard super tax rate of 15%, rather than the income tax rate. 

Condition of release

The nominated event that a person must satisfy in order to access their superannuation savings. Good examples include reaching the age of retirement (65), preservation age (calculated on your super portfolio) or becoming permanently disabled.

Condition report

An agreed record of the condition of a property agreed by both the owner/manager and tenant of a rental property.

Consumer price index

The weighted average price of a basket of goods representative to consumption in Australian households. The index shows the change in this price over time.

Cooling-off period

An agreed period of time after signing a contract where either party can pull out of the contract.

Corporate bond

Similar to a government bond - but issued by a company. A debt security issued by a company to raise capital, usually structured as regular repayments of interest and the lump sum principal repaid in full after the fulfillment period.

Coupon rate

The interest rate paid on a bond.


The definition of what is covered in a policyholders insurance policy.

Credit contract

The contract that defines the details and all terms of a credit contract. Credit providers must provide this.

Credit file

The file kept by a credit reporting agency showing a persons credit history. Credit files are used by lenders to assess a risk in lending to a person.

Credit rating

A rating of the credit history of a person or company, based on their history of borrowing and repayments.

Credit reporting agency

An agency that collects and manages credit information.

Credit union

See building society.


A person or company who is owed money.


Commonwealth Superannuation Corporation

Currency risk

The risk associated with changes in foreign currency exchange rates and their effect on an investment.


The individual, group or company trustee of a custody trust. Usually required to be a company.



Similar in nature to an annuity, a medium-term investment by a company where investors lend money to the company in exchange for a regular, fixed interest amount. The principal is paid in full at the end of the term. Debentures are usually secured by a property.

Debt agreement

A legal agreement - to avoid bankruptcy, made between a debtor and their creditors to pay back debts over an agreed period of time.

Debt consolidation

Also known as loan consolidation, where several loans are combined into one debt, with the aim of reducing required payments.

Debt to equity ratio

The ratio of total debt divided by total equity.


The dollar amount that the insured policy holder must pay.

Defensive asset

An investment considered very low risk, and low volatility.

Deferred establishment fee

A fee charged by a lender when a loan is paid back before its due date, or a set period agreed on signing the loan. Also known as an exit fee or early termination fee.

Deferred payment

A debt that can be paid off in the future.

Defined benefit fund

A supperanuation fund defined by a predetermined formula - such as your average salary and years worked. As opposed to an accumulation fund.

Deposit bond

A bond used in place of a depost, guaranteeing the buyer will pay the deposit in full by an agreed date.


A reduction in the value of as asset over time, due to its wear and tear from usage. 


A finance instrument such as an option or futures contract, where value is determined by changes in the price of the underlying asset.

Dispute resolution

A process or scheme designed to resolve lending issues without going to court.


The spreading of investments across a number of asset classes and assets in order to reduce risk.


A payment made by a company to its shareholders tied to a share of company profits. Franked dividends have already had tax paid on them.

Dividend yield

The ratio of a dividend paid relative to shareprice.

Division 293 tax

A extra 15% superannuation tax for high income earners. The tax is triggered when income (including concessional super contributions) are above $300,000.


Early termination fee

See Deferred establishment fee

Earnings per share (EPS)

A financial ratio used to show a share's potential worth. Calculated by dividing a company's earnings by the number of shares on issue. The higher the EPS, the greater the worth of a share.

Effective interest rate

The annual interest rate that takes into account compound interest and fees.


Export Finance and Insurance Corporation


An insurance companies restriction placed on a type of insurance due to over exposure to a particular event, or increased likelihood of a particular event taking place.

Employer share scheme

A scheme developed by an employer to give opportunities for employees to buy shares of the company. Often issued as a bonus or as part of an employee's remuneration, and also often issued at discount rates.

Enduring power of attorney

The same concept as power of attorney, where a nominated representative can make property and financial decisions on someones behalf. Enduring power of attorney continues if the person becomes mentally incapacitated at any stage.


Part ownership or a stake of a company. Also known as a share or stock. Shareholders are entitled to dividends which is a portion of the company's profits.


The value of an asset less any money owed towards it.

Equity investment

A share or property based investment to receive income and capital gains.

Equity release

An agreement with a financial provider to be paid the equity in a property whilst still owning the asset. The equity is then paid back through the sale of the asset at a later date. Also known as a reverse mortgage or home reversion.

Establishment fee

A one off startup fee charged to set up a loan.

Ethical investment

An investment based on a positive environmental, social and ethical impacts. Investment fund's define their interpretation and weighting of these values through their PDS.


The amount of loss or damage the policyholder must pay before a claim can be made against an insurance policy

Exchange rate

The price to buy or sell a currency with another currency.

Exchange-traded treasury bond (eTB)

An Australian government bond with medium to long term debt security with a fixed annual interest rate and a fixed face value of $100.


Something explicitly not covered under an insurance policy, such as a pre-existing condition or illness for a health insurance policy.


The person appointed within a will to administer the will.

Expense ratio

The expenses incurred in underwriting and administering a policy as a percentage of the net earned premium.


Face value

The amount payable upon maturity of a security. Not including any interest payments.

Fee for service

The fee paid to a service provider such as an accountant for work, different to a commission.

Finance broker

An intermediary who arranges finance or loans between banks and other loan providers and the borrower. Mortgage broking is a type of finance broking.

Financial claims scheme (FCS)

The government guarantee of deposits up to $250,000 per account-holder in the event of failure of the authorised deposit-taking institution (ADI) such as a bank or credit union.

Financial plan

A plan setup with a financial planner that defines financial goals and investment strategies to reach those goals, according to personal circumstance.

Financial planner

A professional representative of an ASIC licensed organisation approved to provide advice on areas of finance such as: investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. Also known as a Financial Adviser.

Financial service

A service that deals with the management of money, such as providing advice, dealing in a financial product or operating a depository service (like a bank).

Financial services guide (FSG)

An official document required to be provided by every financial product or service explaining services, fees and management of accounts.


Foreign Investment Review Board

First home owners grant

A state government grant for first home buyer's to break into the housing market.

First home super saver scheme

A federal government initiative allowing voluntary super contributions of up to $15,000 per financial year and $30,000 in total to be withdrawn and used to contribute to a deposit for first home buyers.

Fixed deposit

An account where money is deposited for a set period of time, usually set at a fixed interest rate for the term which is higher than regular transactional accounts.

Fixed interest rate

A set interest rate for a loan, regardless of market changes.

Fixed interest rate

A set interest rate for a loan, regardless of market changes.

Fixed rate home loan

A set interest rate for a home loan, protecting the purchaser from rising interest rates, but also sacrificing potential benefits from falling interest rates.


A company listing its shares on a stock exchange for the first time, selling a portion of the business in order to raise capital. Also known as an initial public offering (IPO).

Foreign transation fee

A fee charged by a bank or credit card provider for a transaction taken place with an overseas based merchant.


Financial Ombudsman Service

Franking credit

The amount of tax already paid on the profits of a dividend you recieve.

Financial Reporting Council

Financial System Inquiry

Fund choice

The option for employees to choose the super fund their employer pays contributions too.

Fund manager

An individual or organisation that invests funds on behalf of a financial institution.


An investment philosophy defined by investing in companies or stocks with strong earnings prospects.



Borrowing capital for the purpose of investing, such as a mortgage.

General Insurance

Non-life based insurance policies, such as propery and casualty insurance.

Government bond

A fixed interest investment, issued by a government which pays a fixed interest rate, the original investment amount is repaid at maturity of the invesment term.

Government co-contribution

A contribution made by the Australian government to a person's superannuation account, according to the person's personal circumstances and personal super contributions. This is designed to help build lower income earners superannuation before retirement.

Gross claims incurred

The total amount claimed against an insurance policy during a set period.

Gross earned premium (GEP)

The total amount earned in premiums of a policy during a set period.

Growth asset

An asset that has the potential to grow in value over time, as well as produce income.

Growth fund

An investment fund geared towards growth assets. Typically has higher returns over the long term, but is volatile in the short term.

Growth investing

An investment philosophy defined by investing in companies or stocks with strong growth prospects into the future.


A person who is legally responsible for another persons debts if they default. This is signed as a guarantee of the persons loan or debt.


Hedge fund

A pool of investments used to create an investment fund that 'hedges' its investments. Hedging aims to achieve a return in any market situation by using multiple strategies that reduce the chance of loss in any circumstance.


Strategies used in fund management to offset any potential fluctuation of overseas currencies and their impact on returns.

Honeymoon or introductory interest rate

An attractive interest rate offered at the start of a loan, credit card or savings account, that reverts back to a standard rate after a short period.



Insurance Council of Australia

Imputation credit

The tax credit pased on to shareholders for tax already paid on shares - see franking credit.

Income producing asset

Any asset producing an income.

Income protection insurance

An insurance policy designed to supplement a person's income in case of that person not being able to work.


A measure of change to a specific group of investments. For example, the ASX 200 tracks the performance of the top 200 companies by market cap, listed on the ASX.

Index fund

A fund managed to match the performance of an index.

Industry fund

A superannuation fund originally setup to cater specifically to a particular industries' employees, most are now available to the public.

Industry sector

A designation for a group of companies related in their primary business activities. Good examples include healthcare, telecommunications, finance and information technology sectors.


The gradual increase in cost of goods and services over time.

Initial public offering (IPO)

A companies initial listing on a stock exchange (also known as a float), that offers shares for purchase.

Insider trading

An illegal activity where someone trades a financial product whilst knowing something related that is not known generally to the public.


An agreement set up as a policy to transfer risk from a person, business or company to an agreed insurer. Usually paid for in the form of premiums, where the insurer agrees to suffer specific losses instead of the policy owner when specific events occur.

Insurance policy

A specific document detailing the agreement of what is being insured in a policy.

Insurance premium

The (generally monthly) fee charged by an insurance company for an insurance policy.


The rent paid on the use of money. Interest is earnt by lending money, or paid by borrowing money.

Interest rate

The rate at which borrowed money is lent out at for use of that money, expressed as a percentage per year.

Interest-only home loan

A home loan where only the interest is paid, no repayments to the principal are made.


An asset bought with the intention of earning a return, through an income or increase in value over time.

Investment manager

A person or organisation responsible for managing the investments of others. See fund manager.

Investment Philosophy

A set of beliefs and principles that guide investment decisions. See value investing, fundamental investing, growth investing and socially-responsible investing.


An organisation that creates, sells and manages securities to raise funds and mange its operations.


Joint account

A bank account or financial institution account that is listed in the name of more than one person.

Joint tenants

Ownership of a property by two or more people together in equal shares, once a person dies in this arrangement, ownership is automatically passed on to the other joint tenants.



A document that details the terms for the borrowing of a property in return for rental payments.

Lenders' mortgage insurance (LMI)

A policy that insures a lender against non-payment or default on residential property loans (mortgages).

Letters of credit (LoC)

An agreement, usually written for a financial institution such as a bank to supply credit (provide funding) if necessary.


An investment strategy based around the borrowing of capital in order to finance an investment.


The responsibility of a person or organisation for something such as causing a car accident.


A debt or money owed.

Life cover

An insurance policy that returns the policy amount to beneficiaries when the insured person dies.

Limited partnership

A shared business ownership structure whereby at least one party has limited liabiltiy (generally a passive investor), and at least one party has unlimited liability and is in charge of managing the business as a whole.

Limited recourse loan

A loan whereby the liability faced by the borrower if the loan defaults are limited to the value of the assets the loan was used to purchase.

Line of credit loan

A line of credit loan allows someone to borrow against the equity they have in a mortgage.


The term given to the relative ease with which an investment can be turned into cash. For instance, shares on the ASX are considered liquid as they can be sold very quickly. Owning a house is illiquid due to the length of time it takes to sell a property.

Listed property trust

A property management trust invested in buying and managing properties. Also known as a REIT.


An insurance society based in London made up of corporate underwriting members.

Loan consolidation

The combining of several different loans or debts with the intention of creating one reduced payment that is easier to manage.

Loan to value ratio (LVR)

The amount of a loan as a percentage of the asset it was used to buy.


Managed discretionary account

An account designed so that investment managers can act on your behalf to buy and sell securities with funds from the account.

Managed fund

An investment fund where invetors money is pooled in order to buy assets and investments by a fund manager.

Managing General Agent (MGA)

A wholesale insurance agent such as a retail agent - capable of underwriting and issuing insurance policies on behalf of an insurer. Generally, the insurer will then handle claims.

Margin call

A position whereby the value of an asset falls below the agreed LVR, usually resulting in the lender asking the borrower to deposit money into the loan to settle the difference.

Margin loan

A loan taken out to invest in shares and managed funds where the investment or asset invested in itself is used as a security for the loan.

Marginal tax rate

The maximum tax rate that an individual will pay in tax, according to their income.

Market index

An index measuring the change in value of a market or investment class.

Market sector

A group of companies that are in competition with eachother due to the similarity of the goods and services they buy and sell. For example, the mining or telecommunications markets.

Master trust

A tool usually used by financial planners to pool investors money so as to buy investments with better purchasing value and liquidity.


The final date at which an investment or loan is settled, or paid in full.


an individual contributing too and receiving benefits from a fund.

Mezzanine finance

A form of debt financing that can be converted by the lender into equity or ownership of the company if the loan is not paid back in time.


A security used to buy real estate that details repayment of the debt or home loan.

Mortgage broker

A person who facilititates mortgage contracts by matching borrowers and lenders.

Mortgage fees

The fees paid to by a mortgagor to manage and set up a mortgage.

Mortgage fund

An investment fund used to finance mortgages.


The lender in a mortgage arrangement.

Mortgagee sale

The sale of a property by a lender in order to recoup the value of the loan due to default of payments.


The borrower of funds within a mortgage arrangement.


Negative gearing

Borrowing money for an investment where the return is less than the cost of serving the loan.


When a person or entity does not provide or practice sufficient or reasonable care for another party whilst under their care, this can lead to liability of the negligent person.

Net asset value (NAV)

The total value of assets minus liabilities for a company or fund.

Net claims incurred

The amount of claims incurred during a set period.

Net claims ratio

Net claims incurred as a percentage of net earned premium.

Net worth

The difference between total value of assets and debts.

No negative equity guarantee

The limit to how much a person can borrow or owe in a reverse mortgage, protecting the mortgagor from owing more money than the property is worth.

Non-concessional super contributions

Payments buy a person to their superannuation account after they have paid income tax on them. These contributions are not taxed when received to your super account.


Offset account

A bank account used as a regular transaction account, and linked to a mortgage. Interest paid on the mortgage is only charged against the net balance of the mortgage minus the offset account.


A contract that gives the owner the right to buy or sell an asset at a fixed price on a set date in future.

Overdraft facility

An arrangement usually tied to an individuals bank account whereby the account owner can withdraw more funds than they have available in the account. 

Overdrawn account

When the pre-defined credit limit on an account has been exceeded. 


Participating employer

An individual permitted by the trustee to make contributions on behalf of a member.

Passively managed

An investment management approach such as an index fund, where a fund manager buys a portfolio of assets aimed at generating a return without actively buying and selling the assets. Also known as a "buy and hold" strategy. 


The payments received periodically from a members super fund after retiring with which to live on.


A regular income payment such as the government age pension or an account-based pension from your super account.

Personal insolvency agreement

Very similar in reality to bankruptcy, where a person's assets are formally taken under control by a trustee who manages the repayment of debt and possible solvency of assets. 

Personal lines

Insurance issued for individuals and familiies. Eg. private motor vehicle insurance, home and contents insurance.

Personal loan

A relatively short-term loan (2-7 years) usually unsecured by any asset, used to finance the purchase of a low-value asset such as a car. 

PoA (Power of Attorney)

The appointment of someone to act on a persons behalf in a legal or business matter up to a point. As opposed to enduring power of attorney. 


The binding legal contract that documents an insurance policy, and details the extent of its cover.

Policyholder (insurance)

The insured entity.

Ponzi scheme

A fraudulent investment company or scheme, where new investors money is used to pay existing members interest payments until no new investors can be found.  


A person or investors pool of assets including shares, property, cash and other investment types.  


The set amount per period required by the policy holder to pay for an insurance policy.

Preservation age

The official age at which a person is legally allowed to withdraw their super. 

Preserved benefit

A super benefit that is not accessible (remains in the super fund) until the member reaches their preservation age and retires. 

Price earnings ratio (P/E ratio)

A common ratio defined as the current price of a share divided by the earnings per share used to work out the price value of shares in comparison to competitors. 


The original sum of money used in an investment, or the outstanding amount still owing on a loan. 

Principal (SMSF)

The person who establishes the SMSF. This role then carries no more responsibility to run or manage the SMSF.

Product Disclosure Statement

A legal document required by the Corporations Act - showing the provisions included in a fund, product, or security, and the results of those provisions.

Property investment

The purchase of a property with the intention of providing an income, through rent and/or capital growth. 

Property trust

A trust fund set up in a similar fashion to an investment fund that invests in various types of property. This can be privately owned or listed where saleable units can be bought and sold on the stock exchange. 


A document produced by a company looking to sell shares in the company in order to raise capital. A prospectus covers all the relevant details and information required to invest in the company. 

Public trustee

A government agency that provides professional services in an independent fashion, such as making and executing wills, managing trusts and Power of Attorney decision making. 

Put option

A contract agreed to give the owner the right to sell (but not the obligation) an investment at a set price and before a set date in the future. Used to guarantee a price when the seller believes the price of an asset will drop. 



Reserve Bank of Austraila

Record of advice (ROA)

An official document detailing the financial advice given, and confirming the agreed decisions made by both the client and financial advisor in providing advice. 

Redraw facility

A common facility included in many mortgages, where extra money put towards a mortgage can be withdrawn again for other uses. 


Changing an existing loan arrangement by transferring to a newly agreed loan contract with new terms, either with the same lender or with a new lender. 

Regulatory risk

The general risk that changes in government policy or regulation poses to an investment, benefit or income. Eg. yearly changes in tax structure have enormous impacts on small businesses and their employees. 


An agreement by an insurance company to pass on or indemnify their own risk to a secondary insurer.

Rental bond

The deposit paid by a tenant upon leasing a property used in case of any damage to the property. Legally held in escrow by the relevant state government office and released upon agreement between both parties. 

Responsible entity

A licensed entity that legally operates a managed investment scheme. 


The dollar amount of interest that an investment earns.

Reverse mortgage

A type of loan based on the value of an owned property, where a retiree can withdraw an amount of equity in their home, repayable with interest upon selling the home, usually as part of a deceased estate settlement. 

Reversionary beneficiary

The person the pension must be paid too after the member dies.


The level of exposure of an investment to a negative result or return.

Risk tolerance

The degree of exposure, or level of uncertainty to a negative result that an investor is willing to take on in making an investment. Generally, the larger the risk, the larger the potential return. 


Salary sacrificing

An agreement between an employer and employee where a portion of that person's pre-tax salary is contributed to superannuation rather than paid to them directly. This is used as a saving strategy, and also has significant tax benefits. 

Savings account

A standard deposit account separate from a day to day transactional account that offers a higher interest rate. The funds are generally accessible at any time. 

Savings bond

A government bond security offered as a medium-term investment, similar to a fixed term investment. 


Standard Business Reporting

Secured loan

A loan that is offered on the condition of it being attached to an asset. If the loan defaults, the asset may be sold by the lender in order to recoup the outstanding loan funds. 


An investment that can be traded in a financial market. Essentially a security commoditises an asset into saleable shares, that are easily transferable. 

Security for a loan

An asset, or security that is used as a guarantee for a loan. If the loan defaults, the lender may sell the asset in order to recoup the loan amount. 

Seld managed super fund (SMSF)

A private, self-managed superannuation fund of up to four members, who are all trustees in the fund. 

Senior debt holder

The owner or holder of a debt security which gives that security first priority to recoup any funds owed through that investment, in the event that the company fails. 


Part ownership of a company. Also referred to as stocks or equities. 

Short selling

The speculative practice of selling a security that you do not own. This is done by borrowing the security (or shares) from a third party and selling the shares immediately, with the agreement that you will then buy back other shares at a later date and return them to the original owner. The idea being that you have predicted a fall in the price and will profit the difference in price. 

SIS Act and Regulations

The Superannuation Industry (Supervision) Act 1993 (Commonwealth)

Socially-responsible investing

An investment philosophy defined by investing in companies or stocks that align with the investor's value's and ethics. Usually based around societal and environmental impacts.

Solvency Ratio

The ratio of net tangible assets of an insurance company in comparison to net earned premiums. Used as an industry indicator to assess insurance providers abiltiy to settle their existing liabillities.

Sophisticated investor

An investor specifically designated by the Corporations Regulations Act 2001 as having either a gross annual income of $250,000 or more in the past 2 previous years or net assets of at least $2.5 million. 

Speculative investment

An investment that is very risky in that the potential loss of the investment is high, and the potential gains are extremely lucrative. 

Statement of Advice (SOA)

An official document that sets out the financial advice given to a consumer by their financial planner or adviser, detailing payments, benefits and the basis of which the advice has been given. 


Part ownership of a company, also known as a share or equity. 

Strata levy

The fee paid by homeowners for the management of common property (eg an apartment block). An important consideration for home buyers as these fees can be significant costs. 

Strata title

A property that is divided and sold into blocks or units, that has a common property built into the plan, such as a block of apartments. 

Sub-prime loan

A loan with a higher interest rate due to the fact that the borrower does not satisfy the criteria for a traditional loan. 

Subordinated note

A debt security which has secondary claims to any asset recuperation if the company fails. (secondary to a senior debt holder). 


The compulsory saving of a percentage of a person's wages or earnings into a fund, to accumulate, earn capital growth and become available for the person to retire with.  

Superannuation guarantee

The amount minimum required of a persons wage or salary that an employer must pay into superannuation, currently 9.5%. 



A company's attempt to take control of another company, through a bid for its ownership. 

Tax file number

An individual's unique number as registered with the tax office. 

Taxation risk

See regulatory risk.


As defined by the terms of a property lease, a person's right to use and occupy a property. 


A length of time associated with an investment as to how long it will run for.

Term deposit

A deposit, or investment where an amount of money is given to a financial institution as an investment for a set period of time with set interest rates payable on the amount. 

Transaction account

A day to day account where money is readily available for any use such as withdrawals and deposits. 

Trust deed

The governing rules of a superannuation fund.


The persons or company responsible for decision making and administering a fund and its investments.



When an asset is insured, but not for its full value. 


The process of reviewing and determining appropriate insurance levels and coverage and assosciated premiums for an insurance application.


An asset owned by a person or company, that another party has a claim over. For instance, a person with a mortgage on a house owns the property, but the mortgage provider has a claim over the house until the mortgage is paid off.


An investment fund not setup to deal appropriately with overseas currency fluctuations and investment returns. 

Unit price

The $ value of a share in a business. 

Unsecured loan

A loan where no asset is being used as a security. Usually, interest rates are higher as there is a greater risk involved in lending the capital. 



An assessment of the value of an item, by the process of appraisal. Used for the purpose of insuring.

Value investing

An investment philosophy defined by investing in companies or stocks seen to be underpriced by the market.

Variable interest rate

Where an investment or loans interest rate may change during the term. As opposed to a fixed interest rate. 

Variable rate home loan

A home loan where the interest rate is pegged to the official cash rate. 

Vesting date

The date a trust deed ends. Usually 80 years from commencement.


A measure of the fluctuation of the return, or the price of a security over time. The higher the frequency and range of movement, the higher the volatility and associated risk. 



A legal document that defines how a person's assets will be distributed when they die. 

Wrap account

See master trust. 



The rate of return on an investment.