Glossary - S

salary sacrificing

When you and your employer agree to pay a portion of your pre-tax salary as an additional contribution to your superannuation. This can be a tax-effective strategy and usually suits middle to higher income earners.

savings account

A deposit account held at a bank or other financial institution that offers a higher interest rate than most basic transaction accounts. Account holders can usually access their account at any time.  

savings bond

A type of government bond offered to retail investors as a medium term investment. May also refer to a type of fixed term deposit or investment bond offered by an Australian bank.

scam

A trick designed to cheat you of your money.

secondary card

An additional credit card given to a person you have nominated where any money they spend will be borrowings against your credit card account. You are liable for transactions on both cards.

secured loan

A loan that is backed by an asset. The lender may sell the secured asset to get its money back if you cannot repay the loan. Opposite of unsecured loan.

secured note

A type of fixed interest investment that has a first ranking security interest over other property, for example a debt. Issued by companies as a way of raising capital whereby they promise to pay a fixed rate of interest and repay capital at a date in the future. 

security

In relation to financial assets, a security is an investment such as shares or bonds which can be traded in financial markets.

security for a loan

An asset that is put up to guarantee a loan. If the loan is not repaid, the lender may sell the asset to get its money back. See also mortgage.

self-managed super fund (SMSF)

A private super fund you can manage yourself. SMSFs are regulated by the Australian Taxation Office and can have one to four members. All members must be trustees to ensure they are fully involved in the decision-making of the fund.

senior debt holder

A holder of a debt security such as a corporate bond or secured note, in which the debt holder has priority over unsecured (subordinated) debt holders in the event that the company is wound up.

share

A share is part ownership of a company. Shares are also known as equities or stocks. Shareholders are entitled to dividends which represent their portion of the company's profits.

share fund

A managed fund in which the investment manager invests in range of shares to satisfy a specific investment goal, such as maximising capital growth, dividend income or franking credits. May focus on a specific geographic region or industry sector.

short selling

The practice of selling a security or commodity that you do not own. You borrow the commodity or security from a third party (usually a broker) and immediately sell it to a buyer. You then buy identical securities back at a later date, to return to the lender. This is a speculative investment, made when you believe the price of the security is going to fall and therefore you will make a profit. Find out more about short selling on our hedge funds webpage.

SOA

A document that sets out the advice given to a consumer by their licensed financial planner or adviser. It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive.

sophisticated investor

An investor who has had a gross annual income of $250,000 or more in each of the previous two years or has net assets of at least $2.5 million, as prescribed by the Corporations Regulations 2001 (reg 6D.2.03 and reg 7.1.28).

speculative investment

An investment that has the possibility of making an extraordinary profit but also a high possibility of losing most or all of an investor's initial investment.

stamp duty

A state tax imposed on certain transactions, such as car registrations, mortgages and property transfers.

standard deviation

Measures the dispersion of a set of data from its average. The higher the standard deviation the wider the spread of data. For investment returns, a higher standard deviation indicates a wider range of returns which indicates more volatility in a particular market.

stapled securities

When two or more securities are contractually bound together so that they cannot be bought or sold separately.

Statement of Advice (SOA)

A document that sets out the advice given to a consumer by their licensed financial planner or adviser. It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive.

statutory warranty

A guarantee required under law that says traders and manufacturers must ensure their products are suitable for the purpose for which they are supplied.

stocks

A stock is part ownership of a company. Stocks are also known as equities or shares. Shareholders are entitled to dividends which represent their portion of the company's profits.

store card

A form of credit card offered by large retailers. Store cards are used like regular credit cards but usually charge much higher interest rates.

strata levy

A fee paid by property owners for the management of the common property of buildings established under a strata title.

strata title

A building, flats or units divided into blocks, each of which has a title and common property that is part of the land and building in the strata plan.

subordinated note

A type of debt security in which the note holder's claim to the company's assets ranks behind those of secured note and senior debt holders if the company is wound up.

sub-prime loan

A loan given to a borrower who doesn't meet the credit criteria for an ordinary loan. This may include borrowers with a poor credit history, low income earners and those with already high levels of debt. Sub-prime loans carry a higher interest rate because the risk of default is higher than that of a standard loan.

superannuation (super)

Money that you and your employers put into a special fund during your working life to provide you with money to live on when you retire.

superannuation guarantee (SG)

The minimum amount that your employer must pay into your superannuation fund. It is currently 9.5% of your gross salary.

 


Last updated: 18 Nov 2015