Tax - Zamboanga

T

Takeover: When one company buys another. Takeovers can either be friendly, where the target company is happy to be bought, or hostile, when the approach is not welcomed.

Tax: It pays for the hospitals, roads, police and much more. Stop whinging.

Tax-Deferred: When you invest in something like an AVC or PPP, you receive an initial tax refund from the government and are then deferring taxes until you withdraw money in the form of annuity payments, when you will be liable to income tax.

Tax-Efficient Investments: Personal Pension Plans, AVCs, ISAs and formerly PEPs and TESSAs.

Tax relief: A saving of tax arising from the right to deduct particular types of payments or losses from taxable income or gains. This includes payments for specific purposes that are statutorily allowable (such as personal pension contributions), as well as the general right to deduct losses from gains for capital gains tax purposes, or business losses from other income for income tax purposes.

techMARK: is the London Stock Exchange market for innovative technology companies. It was launched in November 1999 and comprises companies from the main market that are committed to technological innovation.

Technical Analysis: The dubious strategy of studying price charts and other market data, such as trading volumes, to predict future price movements.

Tender Offer: When a company wishes to buy back its shares it might do so via a tender offer. Shareholders say what price they are willing to sell their shares for and the company accepts the best offers it receives.

Term Insurance: A no-nonsense life insurance plan where you pay low premiums that will increase as you get older. When the term of the insurance comes to an end, you get nothing, except the satisfaction of still being alive. This is in contrast to With Profits Insurance. See also Whole of Life Insurance.

TESSA: Tax Exempt Special Savings Account. Now replaced by the Individual Savings Account. Keep your money in this bank deposit account investment for five years and you won't pay any tax. For the truly long-term investor, TESSAs are an irrelevancy, as the stock market provides much greater returns.

Tied Agent: Less independent even than an Independent Financial Adviser. These are company sales persons, trying to sell you the products of the company they work for. Buying from them is a fool's, not a Fool's game.

Tip: Someone else's idea of what you should buy. The newspapers are full of them and they abound in investing circles. Ignore them and make your investment decisions on the basis of your own ideas, knowledge and research. That way, you know what you're undertaking and can take full responsibility for your investment decisions, good or bad.

Total Return: What investors are most interested in. The total amount of growth in value - in whatever form - that something provides. For shares, this is made up from price appreciation and dividends.

Transfer Value: If you stop paying into your AVC, FSAVC or Personal Pension Plan and decide to transfer the money out, this is what you'll be left with. In the first years of the plan, this is generally much less than the amount you have put in. Much, much less. See Paid-Up Value.

Treasury: The government's finance department. They have a natty little website: http://www.hm-treasury.gov.uk/.

U

Underperformance: What occurs in the office the day after a particularly heavy office party the night before. This is also what many professionally managed investments do, as compared to the index. Always ask what an investment has returned as compared to the index before you buy it.

Underwriter/Underwritten: The stockbrokers who help a company come public in a New Issue. They underwrite (vouch for) the stock. When a company has been brought public, the shares have been underwritten.

Unit Trust: Your money is invested with thousands of others in one pooled fund. Presiding over the fund is a manager or managers responsible for achieving the fund's stated investment objective. Most unit trusts underperform the index and have high charges. They are to be replaced by Open Ended Investment Companies. See Underperformance.

USA: Spiritual heartland of Capitalism. Home, among others, to Motley Fool Global HQ, the Empire State Building, endless coffee refills in restaurants and Alistair Cooke (bless him).

V

Valuation: The determination of a fair value for a security. If you don't use some reasonable method, then you have what is technically called a "guess" or a "hope."

Volatility: The degree by which a share price tends to move. The more the price jumps about, the more volatile the share.

Volume: The number of shares that have been traded in any defined period. It can give some indication of the validity of associated price movements. If only a few shares are traded a sharp price movement may not be very meaningful. Heavy trading in a share may signify a major development.

W

WTO: The World Trade Organisation. A body of important people that meets regularly to try and stop the USA and Europe arguing about bananas, with limited success.

Wall Street: Also known as "The Street" in US cocktail-party patter, this is the main drag in New York City's financial district.

Warrant: A certificate, usually issued along with a bond or preferred stock, entitling the holder to buy a specific amount of securities at a specific price, usually above the current market price, for an extended period, anywhere from a few years to forever. See derivatives.

Whole of Life Insurance: This will cover you until you die, whenever that may be, unlike Term Insurance. Don't think, though, that you'll pay the same premiums for the rest of your life - they'll be revised upwards every ten years or so.

Widget: A widget is universal catch-all name to describe things that factories make and, hopefully, sell for a profit. They are solid things that hurt if you drop them on your toe. Things like fridges.

Wisdom: The state of being Wise. These are the people who seek to sell you inherently underperforming investments, hobbled even further by heavy charges. See Independent Financial Adviser, Tied Agent, Endowments and Foolishness.

Wise: See Wisdom.

With Profits Insurance: Insurance policies which have both an insurance cover element and an investment element. Endowments are a form of "With Profits" policy often sold to back interest-only mortgages. Here's a quote from the Daily Telegraph about endowment mortgages in 1991: "It cannot be said too often that the advantages to the householder of an endowment mortgage are as nothing compared to the gain to the policy salesman, that life assurance has nothing to do with house purchase, and that savings-related life assurance is a waste of money."

Working Capital: The amount of money tied up in a company just to keep it running. This usually means stocks of widgets it has made but not yet sold, debtors, creditors and cash in the bank.

X

Y

Yield: The annual income provided by a fund expressed as a percentage. Normally calculated by dividing the current price of the fund into the dividend income. See also Dividend Yield.

Yield Curve: A graph illustrating the projected yield from government securities (including gilts) over the next 10 years or so. It stretches from overnight money to the 10-year bond. In a normal market, money costs more in the future, but when an economy is approaching a recession it is common to see short term costing more than long term money. The yield curve shows you this and also shows how your mortgage might be affected.

Yield Gap: Also often expressed as the yield ratio. It is the difference between yields on 10-year bonds and dividends on the All Share Index. Typically, bonds yield twice as much as equities because they have no growth. The yield gap is watched closely by many "value investors".

Z

Zamboanga: A dance performed by joyous Fools at midnight on the night of the full moon closest to April Fool's Day. Also, a town in the Southern Philippines, bordering the Sulu Sea and renowned for piracy.