Glossary

Money words, explained in plain language. Search below or scroll through A to Z.

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APR: Annual percentage rate. A yearly measure of the cost of borrowing that includes more of the cost than the headline interest rate.
Asset: Something you own that has value, such as savings, a home or shares.
Attorney: A lawyer who checks property titles and handles the legal paperwork when you buy property. Ask about fees before you hire one.
Balance: The amount of money in an account, or the amount you still owe on a loan.
Beneficiary: The person or people named to receive money from a policy, pension or account when the owner dies.
Bid and offer: The bid is the highest price a buyer is offering for a share; the offer (or ask) is the lowest price a seller will accept. The gap between them is the spread.
Bond: A loan you make to a government or company. They pay you interest and return your money at the end of the term.
Broker-dealer: A firm registered to buy and sell securities for clients. Shares on the Trinidad and Tobago Stock Exchange are bought through one.
Budget: A plan for how you will spend and save your money.
Cash flow: The timing of money coming in and going out. A business can be profitable on paper and still run short of cash.
Chargeable income: The part of your income that tax is worked out on, after the tax-free allowance and other allowed deductions.
Co-signer: A person who signs a loan with the borrower and takes on the same responsibility to repay.
Collateral: Something of value you pledge to a lender, which they can take if you do not repay.
Compound interest: Interest earned on both your original money and the interest already added.
Comprehensive insurance: Motor cover that, in addition to damage to other people, also covers your own vehicle for things such as accidents and theft, within the policy terms.
Conveyance duty: A government charge on the transfer of property when you buy it. Also called stamp duty.
Coupon: The interest a bond pays, usually a fixed amount at regular intervals.
Credit record: A history of how you have handled loans and credit cards, kept by credit bureaus.
Credit report: A record of your accounts and repayment history kept by a credit bureau and used by lenders.
Credit score: A number based on your credit report that estimates how risky you look as a borrower.
Credit union: A member-owned co-operative that offers savings and loans to its members.
Currency risk: The risk that money held in another currency changes value against the currency you spend in. It can move either way.
Deductible (excess): The part of an insurance claim you pay yourself before the insurer pays the rest.
Default: Failing to make a loan payment as agreed. It can lead to late fees, a lower credit score or legal action.
Defined benefit plan: A pension worked out by a formula, usually based on salary and years of service. The employer carries the investment risk.
Defined contribution plan: A pension where contributions are invested and the eventual pension depends on what the fund is worth. The member carries the investment risk.
Diversification: Spreading money across different investments so one bad result does less harm.
Dividend: A share of a company's profit paid out to its shareholders.
Dividend yield: The dividend per share divided by the share price, shown as a percentage. It rises automatically when a price falls, so it is read alongside other figures.
Dollar-cost averaging: Investing the same amount at regular intervals, so you buy more units when prices are low and fewer when they are high. It does not guarantee a profit.
Earnings per share (EPS): A company's profit after tax divided by the number of shares in issue.
Emergency fund: Money set aside only for real surprises, such as urgent repairs or a loss of income.
Equity: The value of something you own after you subtract what you owe on it.
Exclusion: A situation or item that an insurance policy does not cover. Read these before you buy.
Face value: The amount a bond or bill pays back at maturity, also called par value.
Fixed deposit: Money locked in a bank for a set time at an agreed rate. Taking it out early may cost you.
Flat rate: Interest worked out on the original loan amount for the whole term, even as you repay. It costs more than the same number as a reducing-balance rate.
Going concern: An accounting assumption that a business will continue operating. When an auditor raises a going concern paragraph, it is drawing attention to doubt about that.
Guarantor: A person who promises to repay a loan if the borrower cannot. The guarantor can be asked to pay.
Inflation: A general rise in prices over time, so the same money buys less.
Interest: The price of using money. You earn it when you save and pay it when you borrow.
Letters of Administration: The grant issued by the court appointing someone to deal with the estate of a person who died without a valid will.
Liability: Something you owe, such as a loan or a bill.
Managed float: An exchange rate that moves with the market while the central bank monitors it and intervenes. The Trinidad and Tobago dollar operates this way.
Market capitalisation: The share price multiplied by the number of shares in issue; what the market says a whole company is worth.
Maturity: The date when a loan, bond or bill ends and the principal is due to be repaid.
Mid-market rate: The midpoint between the buying and selling exchange rate. Transfer services usually apply a rate below it, and that gap is a cost.
Money market fund: A fund that invests in short-term, lower-risk assets. It is an investment, not a bank deposit, so it can still lose value.
Mortgage: A loan used to buy property, with the property as security for the loan.
Mutual fund (unit trust): A pool of many investors' money, managed together and invested in many things.
Net asset value (NAV): The value of everything a fund owns minus what it owes, divided by the number of units. It drives the unit price.
Net pay: Your take-home pay after tax and other deductions.
Net worth: What you own minus what you owe.
NIS: National Insurance System. The state scheme that workers pay into for certain benefits and a pension.
Payout ratio: The dividend divided by earnings. Above 100 per cent means more was paid out than was earned that year.
Pension: Regular payments made after retirement, funded by contributions during working life. NIS and workplace schemes are examples.
Personal allowance: The amount of income each person can earn before income tax applies. The current figure is set each year, so check the official source.
Pre-need (funeral) plan: A plan bought in advance from a funeral home to cover specified services. What is covered, and what happens if prices rise or the provider closes, are set out in the contract.
Premium: The regular amount you pay for insurance cover.
Price-to-earnings ratio (P/E): The share price divided by earnings per share. A rough measure of how much the market is paying for each dollar of profit.
Principal: The original amount of money you borrowed or invested, before interest.
Probate: The grant issued by the court to the executor named in a valid will, allowing them to deal with the estate.
Prospectus: The official document that explains a fund or investment: its goals, holdings, risks and fees. Read it before investing.
Real return: A return after inflation is subtracted. Two per cent interest while prices rise four per cent is a real return of about minus two per cent.
Rebalancing: Resetting an investment mix to its original target, for example by selling some of the part that has grown too large.
Reducing balance: Interest worked out each period on what you still owe, so the interest part of each payment shrinks as you repay.
Repo rate: The Central Bank of Trinidad and Tobago's policy interest rate, announced quarterly. It influences the base rates banks use to price loans.
Risk: The chance that things go worse than you hoped, including losing money.
Savings bond: A government debt security sold to individuals with a set interest rate and a set term. Check the official terms and rates before buying.
Share (stock): A small piece of ownership in a company.
Sou-sou (susu): A savings group where each member pays in regularly and takes turns collecting the pot.
Spread: The gap between a buying price and a selling price, whether on shares or on currency. Crossing it is a real cost.
Stamp (conveyance) duty: A government charge on the transfer of property. Rules and rates can change, so check the current position.
Sum insured: The most an insurance policy will pay for a claim. It should reflect the real cost of replacing what is insured.
Take-home pay: What you actually receive after tax and other deductions.
Term life insurance: Life cover that pays out only if you die within a set period. It is usually the lowest-cost life cover for a given amount.
Treasury bill: Short-term government debt sold at a discount that pays its full face value at maturity.
Underinsurance: Insuring something for less than it would cost to replace or rebuild. Some policies then reduce the payout in proportion, even on a partial claim.
VAT: Value Added Tax. A tax built into the price of many goods and services, charged at 12.5 percent in Trinidad and Tobago.
Volatility: How much and how fast a price moves up and down.
Waiting period: A time after you take out a policy during which some benefits are not yet available.
Yield: The income an investment pays, usually shown as a percentage of its price.
Zero-rated (VAT): Goods or services charged VAT at 0 percent. Businesses can usually reclaim VAT on their costs.

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