Glossary - A

account number

The number that a bank or other financial institution gives to a particular account. This number plus the BSB identifies that account.

account-based pension

A pension purchased with superannuation money on retirement. You can choose the amount of pension you receive each year within minimum and maximum levels set by law. Your super money is progressively drawn down until it runs out. For most people aged 60 and over, these pension payments have been tax-free since July 2007. Account-based pensions were previously known as allocated pensions.

accumulation fund

A superannuation fund where your retirement benefit depends on the money put in by you and your employers and the investment return generated by the fund. Different to a defined benefit fund.

accumulation index

An index that measures the movement of both the price and the returns of an index, for example, the movement in a share price and the dividends paid. An accumulation index assumes all returns are reinvested and compounded.

active investment management

Where the fund manager buys and sells investments to try to get a better return for their investors than the market as a whole.

actively managed

An investment management approach where a fund manager buys and sells investments regularly in an effort to outperform a specific market index, such as the ASX200.

advance fee fraud

A scam where you are persuaded to pay fees to a scammer and promised huge rewards in return. Also known as a ‘Nigerian scam’. Similar to a money transfer request.

after-tax super contribution

Money deposited into a super fund after you have paid any tax on it. Different from pre-tax contributions (salary sacrificing), which are contributions made before income tax or where a tax deduction is claimed.

Age Pension

A regular, fortnightly payment from the government when you reach pension age. You must meet certain criteria to get the pension. This is a safety net.

aggressive investment mix

A mix of investments which aims for high long-term returns by taking on greater short-term risk and volatility. Consists mostly of assets such as shares and property.

agreed value

Car insurance policies are based on either 'agreed' or 'market' value. An agreed value policy has a set dollar value for your vehicle. Market value policies value your car based on the make, model and condition. The agreed value is usually higher than the market value.

agribusiness scheme

An investment in livestock, farming, horticultural or forestry projects, usually through a managed investments scheme.

allocated pension

A pension purchased with superannuation money on retirement. These have been replaced by account-based pensions.

annual percentage rate (APR)

The interest rate charged to the borrower, excluding expenses such as account opening and account keeping fees. The APR is the basic cost of your credit as a percentage of the total loan amount. Please note that even one credit card will have more than one APR – one for purchases, one for cash advances and one that is charged if you make late payments. A rate that includes all fees is known as a comparison rate.

annuity

An investment, purchased with a lump sum that guarantees to pay a set income for either an agreed number of years, or for life. Generally, your money is locked away for a fixed period or for life, though some annuities allow early withdrawals or for a 'residual capital value'. There is no capital left at the end of the specified period. The income payments may be indexed each year, often in line with inflation. Some annuities allow for reversionary beneficiaries.

asset

Something you own. It may be a financial item like money, bonds, shares or a bank account or physical item like a house, land or a car.

asset allocation

The way in which your investment is divided across different assets like shares, property, fixed interest or cash.

asset class

A category of investments with similar characteristics and market behaviours. Examples include cash, fixed interest, property and shares.

asset manager

A person or company that manages an investment on behalf of others.

at call

Money that can be withdrawn from an account whenever required.

ATM (Automatic Teller Machine)

A machine found in public places and outside banks used to withdraw cash from your accounts 24 hours a day.

ATM card

A card that provides access to your own money via ATM and EFTPOS facilities. See also debit card.

Australian Financial Services Licence (AFSL)

A licence given by ASIC that allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products. You should only deal with licensed businesses as you are better protected if things go wrong and you will have access to free dispute resolution services. A licence does not mean that ASIC endorses the company, financial product or advice or that you cannot incur a loss from the investment. ASIC grants a licence if a business shows it can meet basic standards such as training, compliance, insurance and dispute resolution. The business is responsible for maintaining these standards. The ASIC Connect Professional Registers will tell you if the company or person holds an AFS licence.

Australian Government guarantee on deposits

Refers to the Financial Claims Scheme (FCS) which provides protection to depositors of up to $250,000 per account-holder per authorised deposit-taking institution (ADI) (bank, building society or credit union) in the event of the ADI failing. 

 

Australian Prudential Regulation Authority (APRA)

The prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance companies, friendly societies, and most of the superannuation industry. APRA is responsible for ensuring Australia has a stable, effiecient and competitive financial system. It also provides statistics on the Australian financial sector.

Australian Securities and Investments Commission (ASIC)

The Australian Federal Government agency that enforces laws relating to companies, securities, financial services and credit, in order to protect consumers, investors and creditors.

Australian Securities Exchange (ASX)

Australia’s biggest exchange, where shares in public companies, futures, options, warrants, bonds and other securities and derivatives are traded.

authorised deposit-taking institution (ADI)

Corporation authorised under the Banking Act 1959. Includes banks, building societies and credit unions.

award

An employment standard that sets out minimum wages and conditions for an industry or occupation. Awards cover things like rates of pay, overtime, penalty rates and allowances.

 


Last updated: 18 Nov 2015