accumulating
InvestingA fund that reinvests income for you instead of paying it out.
Think of it like this
Like a fruit tree whose fruit is replanted automatically to grow more trees.
The finance dictionary.
New to money? You belong here. Every term has a plain-English meaning and an everyday comparison to help it stick.
75 terms, explained without assuming you know the basics.
No test. No silly questions. Start with any word that feels unfamiliar.
Altcoin
CryptoAny cryptocurrency other than Bitcoin. Many are small, volatile and may not survive.
Think of it like this
Like calling every fizzy drink that is not the original brand an alternative—except these alternatives can differ enormously.
APR
MoneyAnnual percentage rate — the yearly cost of borrowing including fees.
Think of it like this
Like the full price tag for borrowing money for a year, not just the number in the shop window.
Asset allocation
InvestingHow a portfolio is divided among asset types.
Think of it like this
Like dividing a dinner plate into portions: shares, bonds, cash, and other ingredients.
AUM
FundsAssets under management: roughly how much money the fund holds.
Think of it like this
Like measuring how much money is currently inside the fund's shared pot.
Avalanche method
InvestingRepaying the highest interest rate first.
Think of it like this
Like putting out the hottest fire first: you attack the debt charging the most interest.
Bitcoin
CryptoThe first widely used cryptocurrency, with a maximum supply of 21 million coins.
Think of it like this
Like scarce digital property recorded on a public notebook that no single bank controls.
Blockchain
CryptoA shared digital record kept in sync by many computers instead of one central owner.
Think of it like this
Like a shared notebook copied across thousands of computers, where accepted pages are very difficult to alter.
BNPL
MoneyBuy now, pay later — short-term instalment credit.
Think of it like this
Like taking an item home today and splitting the bill across future paydays.
Bond
InvestingDebt issued by a government or company.
Think of it like this
Like an IOU: you lend money to a government or company and it promises repayment.
CASP
CryptoCrypto-asset service provider — an EU-licensed business offering crypto services under MiCA.
Think of it like this
Like a licensed travel agent for crypto services that must follow the EU's rulebook.
compound interest
MoneyInterest paid on both your money and the interest it has already earned.
Think of it like this
Like a snowball that grows because each new layer can collect even more snow.
compounding
InvestingEarning returns on your returns, so growth speeds up over time.
Think of it like this
Like planting a tree whose new seeds can grow into more trees of their own.
Core
InvestingThe broad foundation of a portfolio.
Think of it like this
Like the sturdy base of a house that the smaller decorative choices sit on.
Correlation
InvestingHow closely two investments tend to move together.
Think of it like this
Like watching two dancers to see whether they usually step in the same direction.
Credit utilisation
MoneyThe share of your available credit you are currently using.
Think of it like this
Like filling a glass: using a small part of your limit looks less stretched than filling it to the rim.
Crypto exchange
CryptoA platform where people buy, sell or hold crypto assets. It may hold the keys for you.
Think of it like this
Like an online currency counter where people swap cash for crypto and back again.
Custodian
InvestingA company trusted to safeguard investments or crypto assets on someone else's behalf.
Think of it like this
Like a professional vault keeper holding assets safely on someone else's behalf.
custody
CryptoWho actually holds the asset on your behalf.
Think of it like this
Like leaving valuables in a secure locker managed by someone else.
Deposit guarantee
MoneyA national scheme protecting bank deposits up to a set limit.
Think of it like this
Like a safety net under the money you keep at an eligible bank.
distributing
InvestingA fund that pays income out to you as cash.
Think of it like this
Like a fruit tree that hands you the fruit as cash instead of replanting it.
diversification
InvestingSpreading money across many investments so one bad outcome hurts less.
Think of it like this
Like carrying your eggs in several baskets so one accident does less damage.
Domicile
FundsThe country where the fund is legally established.
Think of it like this
Like a fund's legal home address, which decides which country's rules apply to it.
Drawdown
InvestingA fall from a previous portfolio high.
Think of it like this
Like measuring how far a lift has dropped from the highest floor it previously reached.
emergency fund
MoneyCash set aside for surprises so you never have to sell investments in a hurry.
Think of it like this
Like a spare tyre for your finances: you hope not to need it, but it keeps a surprise from becoming a crisis.
Equity
InvestingOwnership in companies through shares.
Think of it like this
Like owning one tiny brick in a company rather than lending the company money.
ETC
FundsExchange-traded commodity — a listed product often used for a single commodity or crypto asset.
Think of it like this
Like a stock-exchange ticket designed to follow one commodity, such as gold, rather than a basket of companies.
ETF
FundsExchange-traded fund — a basket of investments you can buy and sell like a single share.
Think of it like this
Like buying one shopping basket containing many investments instead of choosing every item separately.
Ethereum
CryptoA programmable blockchain used for smart contracts, tokens and decentralised applications.
Think of it like this
Like a shared global computer where people can build and run digital agreements.
ETN
FundsExchange-traded note — debt designed to track an asset, so the issuer also matters.
Think of it like this
Like an IOU whose repayment moves with an asset's price, so you also rely on the issuer.
ETP
FundsExchange-traded product — the wider family that includes ETFs, ETNs and crypto ETPs.
Think of it like this
Like a shelf holding several kinds of exchange-traded products; an ETF is one item on that shelf.
Factor
InvestingA characteristic used to select or weight investments.
Think of it like this
Like choosing football players for a specific trait, such as speed, rather than picking the whole league.
Fixed costs
MoneyBills that stay roughly the same every month, like rent or a phone plan.
Think of it like this
Like a subscription that arrives on the same date with roughly the same price.
FOMO
BehaviourFear of missing out, often leading to chasing recent gains.
Think of it like this
Like joining a long queue only because everyone else seems excited about what is at the front.
Gas fee
CryptoThe fee paid to process an action on a blockchain such as Ethereum.
Think of it like this
Like paying postage to have your transaction delivered and recorded on a blockchain.
Hard search
InvestingA lender check recorded on your file when you apply.
Think of it like this
Like a lender leaving a small footprint on your credit record when it checks you.
Holdings
FundsThe individual investments inside the fund.
Think of it like this
Like opening a shopping basket and listing every item inside it.
Index
FundsA rules-based collection designed to represent a market or strategy.
Think of it like this
Like a recipe listing which ingredients belong in a market basket and in what amounts.
inflation
InvestingThe rate at which prices rise, reducing what your money buys.
Think of it like this
Like your money's shopping bag slowly shrinking, because the same amount buys fewer things.
Investment policy
BehaviourWritten rules for how and why you invest.
Think of it like this
Like writing the rules of a game before emotions and excitement can change them.
ISIN
InvestingThe 12-character code that identifies a specific security.
Think of it like this
Like a passport number that identifies one exact investment wherever its name appears.
Lifestyle creep
InvestingSpending rising to match every pay increase.
Think of it like this
Like moving the finish line every time your pay rises, so saving never catches up.
Limit order
InvestingAn order that executes only at your chosen price or better.
Think of it like this
Like leaving a note saying ‘only buy this if the price is €20 or less’.
liquidity
InvestingHow easily you can turn something into cash without moving the price.
Think of it like this
Like water versus ice: cash flows immediately, while some assets take time to thaw into spendable money.
Market maker
InvestingA participant posting buy and sell prices to support trading.
Think of it like this
Like a shopkeeper who keeps both buy and sell prices on display so trading can keep moving.
Market order
InvestingAn order prioritising immediate execution.
Think of it like this
Like saying ‘buy it now at the available price’ rather than waiting for a particular price.
MiCA
CryptoThe European Union rulebook for crypto assets and the businesses that provide crypto services.
Think of it like this
Like a common EU traffic code for crypto businesses and certain crypto assets.
Minimum payment
MoneyThe smallest amount that keeps an account in good standing.
Think of it like this
Like taking the smallest allowed step down a long staircase: you move, but the journey can stay expensive.
Momentum
BehaviourA strategy favouring securities with strong recent trends.
Think of it like this
Like joining a moving walkway because it has recently been travelling strongly in one direction.
NAV
FundsNet asset value — the value of a fund's assets minus its liabilities.
Think of it like this
Like adding up everything in a shop, subtracting its bills, and finding what the shop is worth.
Net income
MoneyWhat actually lands in your account after tax.
Think of it like this
Like the slice of cake left on your plate after tax has taken its slice.
Passive ETF
FundsA fund designed to follow an index.
Think of it like this
Like a train following a fixed route—the index—rather than a driver choosing a new road each day.
Premium
InvestingWhen market price is above the fund's NAV.
Think of it like this
Like paying €10.50 for a basket whose contents are currently worth €10.
Private key
CryptoThe secret code that controls crypto in a wallet. Losing it can mean losing access forever.
Think of it like this
Like the only key to a digital safe: anyone holding it can open the safe, and losing it may lock you out.
Real return
InvestingYour return after inflation is subtracted.
Think of it like this
Like checking how much more your pay can actually buy after prices have risen.
rebalancing
InvestingNudging your investment mix back to the split you originally chose.
Think of it like this
Like straightening a leaning bookshelf so each section returns to the space you planned.
Recency bias
BehaviourAssuming what just happened will keep happening.
Think of it like this
Like expecting sunshine tomorrow only because it was sunny today.
Redemption
InvestingThe process of exchanging ETF shares for underlying assets.
Think of it like this
Like returning basket tokens and receiving the actual items represented by them.
Replication
FundsHow the fund produces the return of its target index.
Think of it like this
Like choosing whether to cook every ingredient in a recipe or use a shortcut that aims for the same taste.
Self-custody
CryptoHolding your own crypto keys instead of asking an exchange or app to hold them.
Think of it like this
Like keeping the key to your own safe instead of leaving it with a bank or platform.
Smart contract
CryptoA program stored on a blockchain that runs automatically when its conditions are met.
Think of it like this
Like a vending machine: when the right input arrives, the programmed action happens automatically.
Snowball method
InvestingRepaying the smallest balance first.
Think of it like this
Like clearing the smallest room first so an early win gives you energy to continue.
spread
InvestingThe gap between the buying price and the selling price.
Think of it like this
Like the small gap between a shop's buying price and its selling price.
Stablecoin
CryptoA crypto token designed to follow a currency such as the euro or US dollar.
Think of it like this
Like a digital token trying to walk in step with a currency such as the euro—though the link can still fail.
Staking
CryptoLocking crypto to help operate a proof-of-stake network, usually in exchange for rewards.
Think of it like this
Like putting tokens to work helping a network operate and receiving a reward, while accepting extra risks and restrictions.
Standing order
InvestingA recurring transfer you set once with your bank.
Think of it like this
Like setting an alarm that moves money automatically instead of reminding you to do it.
Tax wrapper
InvestingAn account type with specific tax treatment, like a UK ISA.
Think of it like this
Like a special coat around an account that can shelter investments from certain taxes.
TER
FundsTotal expense ratio — the yearly running cost of a fund, taken from the fund itself.
Think of it like this
Like a small yearly service charge quietly taken from the fund rather than sent as a separate bill.
Thematic
InvestingA strategy built around a long-term idea or trend.
Think of it like this
Like filling a basket around one big story, such as clean energy or robotics.
Time horizon
InvestingHow long until you need the money.
Think of it like this
Like the date on a train ticket: it tells you how long your money has before it must arrive.
UCITS
InvestingThe European fund standard with rules on diversification, disclosure and investor protection.
Think of it like this
Like an EU safety rulebook that eligible funds must follow before appearing on the shelf.
Value
InvestingA strategy focused on companies that look inexpensive by selected measures.
Think of it like this
Like looking through a sale rack for good businesses whose price may be unusually low.
Variable costs
MoneySpending that moves around, like groceries or going out.
Think of it like this
Like a tap: how much comes out changes depending on how you use it.
Volatility
InvestingHow much a value bounces up and down along the way.
Think of it like this
Like waves on a boat: bigger waves mean a bumpier journey, even if the boat is still heading forward.
Wallet
CryptoA tool that stores the keys used to access and move crypto assets.
Think of it like this
Like a key ring for crypto: it manages the keys that let you access assets recorded on a blockchain.