Common Financial Terms

Debt instruments issued by governments and corporations.

An analysis and listing of your fixed and variable expenses and income.

To spread risk across different types of investments. Risk can be spread across geography, type of investment, sector of investment, or risk tolerance of investment.

A payment from the net profits of a corporation to its shareholders.

The process of making financial arrangements for your estate (your assets left after your death). With a goal to arrange the most tax efficient distribution to your beneficiaries.

Fixed expenses happen at the same time every time. A variable expense is random in time.

An investment fund whose goal is capital gain (the growth in value of a share or asset through changes in the performance of the underlying shares) rather than interest or dividend accumulation.

An investment whose returns are based on interest or yield growth.

The potential for loss of gain when a fixed interest rate return is compared to other potential rates of return.

A deceased person's estate when there is no official will to deal with it.

An insurance plan to cover the potential costs of future medical care for the insured.

The potential for loss in any investment market.

A pool of money invested by a manager in which investors own units purchased by their investment in the pool.

Total monetary value of an investor after taxes, liabilities and expenses.

A curated collection of separate assets that have monetary value and are designated for a certain financial objective. Typical portfolios are a mix of stocks, bonds and cash, as well as funds that hold a combination of these assets.

Over time the assets in a portfolio perform differently. On a regular basis adjusting the portfolio to the original investment mix is called rebalancing.

An insurance term referring to payments required to fund an insurance policy.

The current market value of the investments in your portfolio.

The process of determining whether a will is the last valid will of a deceased person.

A regulatory document setting out the terms and conditions of an investment.

The annualized growth of your assets as a percentage.

The potential for loss.

Your ability to absorb loss.

The process of reinvesting a maturing investment (an investment with a fixed period of investment).

Registered Education Savings Plan. A tax sheltered savings plan for education. You are not taxed on the growth of the funds in the RESP while saving. Taxes accrue to the beneficiary (the student) when the funds are withdrawn.

Registered Retirement Savings Plan. Tax sheltered savings plan for your retirement. You pay no taxes on the growth of the funds while saving and you receive a tax receipt for funds deposited. When you retire you take out an income stream and pay tax on that income.

A debt that the lender reduces his risk of non-repayment of by holding an asset of similar value that belongs to the debtor.

A general term for stocks and bonds.

An investment plan in which the government allows payment of taxes on accumulated growth when funds are withdrawn from of the plan and not as they accumulate.

An investment plan in which the government allows growth of an investment to remain untaxed.

Temporary coverage that provides the people or charities you name as beneficiary with a tax-free payout if you die within the term you choose.

Tax Free Savings Account. Like an RRSP there are no taxes on the growth of the funds in the plan. Unlike an RRSP you do not receive a tax receipt for deposits but you pay no taxes on withdrawal.

The growth of an investment from the beginning of the plan to the end of the plan.

A time period after which an investment made by an employer on behalf of an employee becomes owned by the employee.

The frequency and duration of change in the value of an investment over specified periods of time.

Permanent insurance (for the entire life of the insured) based on the probability of death of the insured.