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Investment jargon buster

In partnership with M&G Investments, this is a useful reference for investment jargon words and acronyms: their meanings, definitions and links to further reading.

Asset – Anything having commercial or exchange value that is owned by a business, institution or individual.

Asset allocation – The process of deciding what proportion of your portfolio to invest in which type of asset or market sector

Bond – A loan in the form of a security, usually issued by a government or company, which normally pays a fixed rate of interest over a given time period, at the end of which the initial amount borrowed is repaid.

Capital – Refers to the financial assets, or resources, that a company has to fund its business operations.

Capital growth – Occurs when the current value of an investment is greater than the initial amount invested.

Consumer Prices Index (CPI) – An index used to measure inflation, which is the rate of change of prices for a basket of goods and services. The contents of the basket are meant to be representative of products and services we typically spend our money on

Developed markets – Well-established economies with a high degree of industrialisation, standard of living and security.

Distribution – Refers to the periodical paying-out of interest or dividends received by funds to their shareholders. Dividends represent a share in the profits of a company and are paid out to the owners at certain times during the year.

Inflation – The rate of increase in the cost of living. Inflation is usually quoted as an annual percentage, comparing the average price this month with the same month a year earlier.

Yield – Refers to the income received from an investment and is usually expressed annually as a percentage based on the investment's cost, its current market value or face value.

Last updated: 29 June 2016

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