Glossary

• Accountant

  A certified money management professional who can help you properly manage your business or personal finances. This may include completing your personal or corporate taxes at the end of each accounting year.

• Accrued Interest

  Interested earned but not yet paid out to an investment, loan, or other financial instrument holder.

• Amortization

  The spreading out of debt, including principal payments and interest, and how much is owed at varied times throughout a loan term.

• Annual Interest Rate

  Also known as an Annual Percentage Rate (APR), this is the amount of interest percentage applied to your debt throughout one calendar year. It typically accrues against your debt on a monthly basis.

• Annuity

  A fixed amount paid periodically to an investment holder.

• Appreciation

  The increase in value of an asset over time. An asset can appreciate over time if the fair market value or the demand for an item increases over time. Some items, such as valuable art or other collectibles, appreciate over time.

• Arrears

  An amount that is owed to a debt that is overdue. If you miss a scheduled repayment, that amount is considered to be in arrears.

• Asset

  Any items of value owned, such as a home, vehicle, business, etc. It can also include smaller valuables such as jewellery or art.

• Asset Allocation

  Where you put your money, whether it be into stocks, investments, a savings account, or otherwise.

• Audit

  An inspection of an individual or corporation’s financial records and accounts. Audits can be internal or external functions.

• Balance

  The amount of cash available within an account. It can also mean the amount left owing on a debt.

• Bankruptcy

  The legal process taken by an individual or entity when debts owed are above and beyond what they are able to pay back. It is a form of financial relief.

• Bear Market

  The condition of a market where returns are low, and confidence in it is weak. It is often used as stock market terminology to reflect a market not ready for investments.

• Beneficiary

  Someone who has been named within an estate, or on investment or account, that will receive the property, funds, or policy upon your death.

• Billing Cycle

  The time between when one payment is due on an expense or account and when the net payment is due.

• Bonds

  A type of investment where you loan money to the government or other institution or company for a fixed amount of interest. At the end of the chosen time period, you get your money back plus interest earned.

• Budget

  An overview, usually monthly, that provides data regarding your income versus your expenses, allowing you to make adjustments to how you spend, save, and invest.

• Bull Market

  The opposite of Bear Market, where the stock market is doing well, returns are high, and it is considered a good time to invest.

• Capital Gains

  The difference between what you paid for something previously and how much it has gone up in worth since then upon selling. For example, buying $500 worth of stock and then selling it for $1000 would result in a $500 capital gain.

• Cash Advance

  A cash advance is money taken from an ATM or transferred to your chequing account from your credit card or another lender. This type of loan comes with interest and fees that you will have to pay in return for the advance.

• Cash Flow

  An amount of money that is easily accessible by an individual or business and isn’t tied up in stock, investments, assets, etc. Also known as Liquidity.

• Compound Interest

  The interest on the amount of money borrowed on a loan or deposit. It is earned on the initial amount borrowed as well as the interest made or owed on top of that amount.

• Co-signer

  Someone who signs a loan or contract along with the original borrower and promises to pay the debt in the event that the other person cannot.

• Cost of Living

  How much money it would reasonably cost to pay all of your living expenses and run your household within a certain area, such as Toronto or Vancouver. This amount is typically higher than the minimum wage and is different for each area.

• Credit

  One of the most used terms for different purposes. Credit can be money borrowed from a financial institution like a bank (e.g., a credit card). Or it can mean an amount of money added to an account. For example, you had a credit of $500 added to your bank account when you received your paycheque. It can also mean an amount of money given at a discount, such as a tax credit.

• Debt

  Money you owe and are required to pay back. Debt can be taken when you are given a loan as you become indebted to the debtor until the amount is repaid.

• Deduction

  Money that is taken out or removed from an account. These may include expenses deducted automatically from your bank account, or tax payable deducted from an amount you owe.

• Depreciation

  The decrease in value of an asset from that which was paid over time. For example, a new car will depreciate in value as soon as it leaves the dealership lot.

• Discretionary Expense

  An expense that isn’t necessary to meet your basic or immediate needs. However, it is nice to have and adds to the comfort and enjoyment of life. An example may be a movie ticket or a day pass to a waterpark.

• Dividend

  Money paid out to shareholders by a company when there is a profit.

• Expenditure

  Any amount of money leaving your account to pay a bill or spent elsewhere.

• Expense

  A fixed (recurring) or one-time payment made as part of your budget. A telephone bill, utilities, etc. are considered expenses. Your expenses should also be lower than your income.

• Fair Market Value

  The monetary value that could be obtained from the sale of an asset based on current markets. Housing fair market values fluctuate often.

• Financial Advisor

  Someone who assists individuals or businesses with making thoughtful decisions about their finances both current and future. They can help you plan for your children’s education, your retirement, or even a short-term goal such as a vacation.

• Income

  The money you earn from your wages, passive investments, etc. that is deposited into your bank account each month or over a period of time.

• Inflation

  The increase in the cost of goods and services over time and its link to the Canadian Dollar.

• Installments

  The number of payments paid regularly to pay off a debt. You may pay off a cash loan, for example, in three equal installments or as a percentage of the amount owed over some time.

• Interest Rate

  The cost of borrowing expressed as a percentage rate of the amount borrowed. The percentage amount is added to the amount owing during the length of your loan. It can also mean the amount earned on investment above the initial deposit.

• Investment

  Goods, both tangible and intangible, purchased with the intent of making a profit or income. Examples include investment property, stocks, and even a high-interest savings account.

• Joint Account

  An account owned by two individuals, usually as spouses. Both parties have equal access and responsibility for expenses due from the account.

• Liability

  Another name for a debt owed and usually used as the opposite of an asset on a balance sheet.

• Lien

  A legal registration against a debtor placed upon a debt owed until it is repaid. For example, a lien is registered against a home until the mortgage is paid in full.

• Loan

  An amount of money borrowed from a bank, financial institution, private lender, or person that you are required to pay back. This debt is usually paid back with interest.

• Lump Sum

  A one-time payout or payment, usually made towards a loan or as a single payment into an account. You can also withdraw funds from an account or investment as a lump sum.

• Mortgage

  A loan taken out from a bank or financial institution to pay for a property. You then repay this amount over a period of time, usually about twenty-five years.

• Mortgagee

  The bank or financial institution lending money for a mortgage. Also known as the lender.

• Mortgagor

  Often confused as the bank or financial institution doing the lending, the person borrowing funds for a mortgage is referred to as the mortgagor.

• Mutual Fund

  A trade-holding investment program funded by shareholders that is then managed by a third party.

• Money Management

  The daily management of your finances. The better you can manage your finances, for example, ensuring more income comes in than going out as expenses, the more financially successful you will be.

• Net Worth

  The difference between what you own and what you owe (assets = liabilities = net worth).

• Overdraft

  Taking money out of your account that is more than the amount you hold. Your bank may provide you with an overdraft limit to withdraw the amount for an additional fee. If you are not given an overdraft, you will have to add funds to your account immediately to prevent the account from bouncing.

• Personal Finance

  Your individual finances and everything it includes, such as assets, debts, expenses, credit, insurance etc. This is also what Creditpicks does best!

• Periodic Interest Rate

  An interest rate that is charged over a specific recurring pay period instead of annually.

• Portfolio

  An overview of your assets and liabilities, where your income is coming from and where your expenses are going.

• Rebalancing

  Depending on how you want your wealth portfolio to be allocated, for example, 50% into stocks, if you earn a profit at 60%, you may rebalance your portfolio to reflect your desired allocations.

• Risk

  The potential for a financial investment to have a negative outcome. Investing in a volatile stock market can be high or low risk. Higher risk typically means a higher reward.

• Savings

  Money left over after you pay your expenses and costs each month that you put away for an emergency, a rainy day, or to save for a financial goal.

• Simple Interest

  The interest owed on the amount of money borrowed. It does not compound over time, instead, you can calculate it by multiplying the daily interest by the number of days borrowed. It’s likely to be considered “the cost of borrowing.”

• Stock Option

  Offered as an incentive by companies, they give the stock buyer the right to purchase stocks at a specific (lower) price within a set period if the price of the stock were to increase suddenly.

• Stock Market

  An exchange where people and investment firms buy and sell stocks.

• Stock

  A financial instrument held by someone as partial ownership of a company, fund, or otherwise, that can be sold for a monetary value.

• Treasury Note

  Issued by the government, a treasury note has a cash value and is given to an individual to be cashed back later at a profit. So essentially, you are giving the government a loan.

• Tax Return

  The official filing of your income minus deductible expenses and credits, etc., each year.

• Tax Refund

  An amount issued back to an individual after filing the taxes when the taxes paid on the income over the past year are above those that should have been paid when deductions and credits were added.

• Trust

  An account created on behalf of an individual, often by an estate, that accumulates interest and/or further payments until the individual reaches the rules expressed to withdraw (reaching a specific age).

• Wealth

  Your assets and personal finances minus liabilities, debts, and expenses.

• Yield

  Money earned from interest on an investment. For example, your stocks may have yielded you $100 in dividends last year.