Account Aggregation - Australian-Type Mortgage

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Account Aggregation: A online financial tool that shows you the balances on all your accounts (current account, mortgage, credit card etc) in one place, even though you may have these accounts with different companies.

Accountant: An actuary who wanted a more exciting life.

Accumulation Units: The designation given to unit trusts where income is re-invested and not paid out.

ADR: American Depositary Receipt. Americans are funny about directly holding foreign shares and prefer instead to trade a receipt from a US bank that holds the underlying shares. Although normally the ratio is 1:1 (i.e. 1 ADR = 1 share), sometimes it isn't. BT, for instance, can be traded as an ADR in the USA.

Additional Voluntary Contributions (AVCs): Many try to enhance their occupational pension schemes by paying into one of these plans. Watch out for the hefty charges and dismal underperformance, though. Like Personal Pension Plans, they attract tax relief.

Adjusted Earnings: Companies don't have to produce adjusted earnings, but can choose to do so to clarify their results if the statutory figures are distorted by exceptional items.

Administration: A company in financial difficulty may be put into administration. An administrator will be appointed to run the company so that its debt can be paid off in an orderly fashion.

Advisory Stockbroker: A stockbroker that offers advice on which shares to buy and sell. We don't favour using them. See execution-only stockbroker and churning.

Alternative Investment Market (AIM): AIM opened in 1995 for small, growing companies. It's less difficult to be listed here than on the London Stock Exchange and shares are higher risk and more likely to be difficult to buy and sell. See Liquidity.

America: See USA.

American Depositary Receipt: See ADR.

Amortisation: An annual charge taken through the profit and loss account to allow for the fall in value of an asset. This term is often used in conjunction with an intangible asset.

Analyst: A financial professional who analyses securities to determine a "fair" or "intrinsic" value for those securities. The term is generally applied to almost any professional investor who does research of some kind.

Annual Management Charges: The annual fee charged by the investment managers to the investors to cover the cost of running the fund.

Annual Percentage Rate (APR): When you borrow money, this rate should always be quoted to you. It's the percentage rate which your loan will cost you each year, including all charges. Incredibly, APRs for credit cards can be as much as 30%.

Annual Report: A yearly statement of a public company's operating and financial performance, punctuated by pictures of families enjoying the firm's products and/or services.

Annualise: Taking an item measured over a certain period and restating it on an annual basis. For instance, if it costs £10 million every month to run a factory, the annualised cost is £10 million x 12, or £120 million, since there are 12 months in a year. Simple.

Annuity: The financial mechanism you purchase with your pension fund, which will provide you with a regular income in your retirement. It is really just a way of returning the capital you have accumulated in your pension fund back to you. Because it is aimed at providing you with a guaranteed income the majority of the fund is invested in bonds and government securities. The annuity seller has to guess how long you will you live and return your money to you accordingly. When you die any surplus money stays with the annuity seller. Should you die very shortly after purchasing the annuity, this fact leads to a situation colloquially known as a 'Bummer'.

Appreciation: Increase in the price (or value) of a share or other asset. Appreciation is one component of total return. Payment of an income, in the form, say, of a dividend, is another.

Arbitrage: The process in which one bank rips off another one by selling it something at the wrong price. OK, that was a bit facetious, even if it's pretty accurate. It's the process by which small, local price differences in a share are exploited and thus evened out. For instance, Unilever trades on the stock exchanges in London and in Holland and any changes in price in one market - say, through an institution selling off a large chunk of shares in London - will also rapidly be reflected on the other market through arbitrage.

Australian-Type Mortgage: As it sounds, a type of mortgage common in Oz. Interest due is calculated daily as opposed to yearly, which can make a significant difference to the cost for those on a repayment mortgage. Also more flexible and allows periods of both under- and over-payment of the mortgage to suit the borrower's changing financial circumstances.