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Savings Glossary

ABCD FGH IJ K LMNOPQ R S T U VW X Y Z

 

 

 

Term

Description

A

AER

Annual Equivalent Rate shows what the interest rate would be if we paid interest and added it to your account each year. This allows you to compare what return you can expect from your savings at the end of the year.

Annual interest

Interest that is paid on a yearly basis.

Averaging

The use of an average is designed to smooth the performance of the Index and shelter your investment from any sudden fluctuations. This means that you will be protected from any sudden drops in the Index. This also means that you may not get the full benefit of any sudden increases.

B

Bank of England base rate

The interest rate published by the Bank of England.

Bonus

The opportunity to earn an additional rate of interest each year by meeting account conditions. Or an introductory additional rate as a welcome to your savings accounts.

C

Capital

The amount of money you originally invest.

F

Fixed rate

This is a rate of interest that will not change during the term of the account investment.

Fixed term

The period of time that money is invested. This is agreed on opening the account and stays the same until maturity.

Fund

Money which is pooled together (collected from investors/policyholders) for the purpose of purchasing shares and bonds.

Fund Manager

The individual or team responsible for looking after your investments. Fund Managers buy and sell shares and bonds in various stockmarkets around the world.

G

Gross

The gross rate is the interest rate we pay before income tax is taken off.

Growth

The return over and above your original capital.

I

Investment

Typically the placing of money with a firm, over a medium to long term, which buys and sells assets such as bonds or stocks and shares with the aim of achieving growth and/or income for the investor.

ISA

An Individual Savings Account (ISA) that allows you the opportunity to save without paying Income Tax or Capital Gains Tax on the return from your savings.

ISA Limits

At the start of every tax year you get an ISA allowance. A tax year runs from 6 April one year to 5 April the next year. For the 2014/2015 tax year, you will be able to save up to £11,880 in an ISA until 30 June 2014, of which up to £5,940 can be put into a cash ISA.

From 1 July 2014, the overall ISA subscription limit is increasing to £15,000, which can be paid into a cash ISA, a stocks and shares ISA or a combination of the two.

ISA allowance

The amount you are able to save in an ISA on which the returns are free of Income Tax and Capital Gains Tax.

L

Lump sum

A single amount of money an individual wants to put into an account or an investment.

M

Monthly interest

Interest that is paid on a monthly basis.

N

Net

The net rate is the interest rate we pay after deduction of income tax at the rate specified by law (currently 20%).

O

OEIC

OEIC stands for Open Ended Investment Company. OEICs are managed by Fund Managers and, when investing in an OEIC, you are buying shares in a company which is buying shares in other assets, such as bonds.

P

p.a.

'per annum' means every year.

T

Tax free

The tax free rate is the rate of interest payable where interest is exempt from income tax.

V

Variable rate

A rate of interest that can change over time.

W

Withdrawal

When instructions are carried out to pay money out of your account.

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