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Wise words from independent financial experts
Should I invest in the stock market or save?
Investing in the stock exchange always comes with an element of risk. But the rewards can be particularly juicy. Find out whether speculating to accumulate is for you, or whether you're better off stashing your money away in savings.
An award-winning freelance financial journalist with 20 years' experience, Melanie is former Deputy Editor of The Daily Telegraph's Your Money section.Meet all the mentors
If you’re planning your finances for the future, it’s a good idea to spend a bit of time learning the acronyms, abbreviations and all the other terms. Here are some to get you started.
- Account balance
The amount of money you have in a bank account. It can also mean the amount of money you owe a lender or creditor.
AER stands for Annual Equivalent Rate. An AER is intended to make savings accounts easier to compare. The standard AER comparison is based on the interest you’d get by putting money into an account and leaving it for one year.
AMC equals Asset Management Company. These companies invest clients’ money in a wide range of investments which the individual wouldn’t be able to otherwise access.
No relation to James. A bond is a savings account which earns a fixed rate of interest over a set period of time. Bond terms can vary between one and five years, and the longer the term the higher the rate of interest tends to be.
An Individual Savings Account (ISA) is a savings account where you don’t pay tax on the interest you earn. As your earnings are tax-free, this means you get to keep everything that you invest and earn. There are four different types of ISAs: cash ISAs, stocks and share ISAs, innovative ISAs and lifetime ISAs.
- Independent Financial Advisor (IFA)
An IFA is a professional who is authorised and regulated by the Financial Conduct Authority to advise on suitable financial products after researching the whole market and a customer’s needs and circumstances.
This is the money that you earn on a credit balance (for example: money in your savings account), or the money that you are charged on a debit balance (for example: an overdraft).
A charge you pay to the government – there are different types of tax but income and inheritance tax are two of the most widely known.
- Tax free
Magic words. This simply means that you don’t have to pay tax. For example, with a tax-free Cash ISA, you don’t pay tax on any interest you earn.
- Tax year
A tax year has its own calendar year: it runs from 6 April until 5 April on a rolling basis.
- Tax year for ISAs
A tax year for ISAs follows the same dates as the tax year (6 April until 5 April). The current ISA subscription limit is £20,000 for the 2020/21 tax year.
The term is the period of time your investment runs for.
This stands for Total Expense Ratio. In very simple terms: it’s the total cost of a fund divided by the total fund’s assets. This generates a percentage figure. Costs include management fees and operational expenses like legal fees. The TER is important to investors as the costs are written off against the fund’s returns, affecting their individual profits.
Everyone needs help from time to time and so you may find these links handy.
Money Advice Service
How to save money, types of savings accounts and getting started with investing.
Help with understanding the tax paid on savings interest and your Personal Savings Allowance.
Financial Services Compensation Scheme (FSCS)
Information about the UK’s Deposit Guarantee Scheme which protects your money should anything happen to your bank, building society or credit union.
Bank of England
Latest news and announcements from England’s central bank.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.