Capital gain

If you sell an investment for more than you have paid for it, the profit you make is called a capital gain.  <back>

Collective Investment

These are investments such as unit trusts and investment trust schemes, where money is pooled from lots of people investing their contributions.   <back>

Fund Manager

Someone who invests money and manages a portfolio of investments such as unit trusts and investment trusts.   <back>

Gilts

Bonds issued by the British Government, that can be bought or sold on the stock market.   <back>

Independent Financial Adviser (IFA)

Advisers who are independent and are not limited to advising on the products of a particular company.   <back>

Individual Savings Account (ISA)

Savings accounts that let you save in cash, equities (bonds, gilts, shares and unit trusts), life insurance policies or any combination of the three separately (Mini-ISA) or together (Maxi-ISA). There are tax breaks associated with ISAs, you don't pay tax on the income you get from them or on any gain you make when you sell them.   <back>

Inflation

An increase in the price of goods and services over a period of time. In simple terms this means that the money you have today will be worth less tomorrow.   <back>

Instant Access

Accounts where if you withdraw money without giving the bank or building society notice you don't lose interest on your savings, also called current accounts.   <back>

Investment Trust

This is a company that invests in the shares of other companies. Investment trusts are different from unit trusts. If you invest in an investment trust, you are buying shares in the investment trust itself.   <back>

Life Insurance

In relation to ISAs, this is an insurance policy with a savings element that will also pay out a fixed amount of money if you die during the term of the policy.   <back>

National Savings

A range of savings products that the Government issues, available at Post Offices. A very low risk investment. The Financial Services Authority does not regulate National Savings products.   <back>

OEIC

A collective fund similar to a unit trust where people pool their money enabling them to invest in a wide range of investments. Like a unit trust, it is open ended (i.e. the size of the fund is not fixed), and your money buys shares in the company managing the fund instead of buying units.   <back>

Pooled Investment

Another term for a collective investment.   <back>

Stock Market

Where stocks and shares are bought and sold.   <back>

Unit Linked

Your contributions buy units in the selected fund. The value of the units depends on the underlying assets in the fund. Consequently the value of your fund can go down or up. There is a wide range of funds to choose from: some are relatively low risk and others can be very speculative.   <back>

Unit Trust

A fund which pools investors' money, making it easier for them to buy into a wider range of investments and reduce the costs of investing. If you invest in a unit trust your money is used to buy units, thus the more people that invest in the unit trust, the bigger the trust gets.   <back>

With Profit

At the end of each year the company declares the reversionary bonuses (also known as 'regular' or 'annual'). These bonuses are added to the value of the fund and once added, cannot be taken away - although the product provider will usually reserve the right to apply a 'Market Value Adjuster'. Reversionary bonuses are guaranteed to be paid in full on the contractual maturity date. A Market Value Adjuster (also known as 'Market Level Adjuster' or 'Market Value Reduction') is a type of penalty applied on early encashment. It is usually applied when the stock market is falling or fluctuating rapidly. The idea is to ensure the surrender value received is not unrealistic when compared with the underlying assets of the fund. A further bonus may be paid on the contractual maturity date or on a death claim. This is called the 'terminal' or 'final' bonus. A factsheet (pdf file, 105kb) on with profit policies can be found on the FSA Consumer Help website.  <back>

Hedgelands Financial Services Ltd, Hedgelands, Abbotskerswell, Newton Abbot, TQ12 5PW