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The difference between the buying and selling price of a share. The bid price is the price at which the share is bought and the offer is the price at which it is sold.

A bond is essentially a certificate that says you have lent money to a borrower, which will be repaid on a certain date and at a fixed rate of interest. They can be bought or sold like shares, but the returns are guaranteed and are paid as interest rather than dividends. The term bond is attached to a number of investments, but the most common are those issued by the Government or commercial companies.

The total value of someone's assets, less liabilities.

A form of tax on the profits from trading, or substantial disposal of assets by traders whose assets are not trading stock, or people who do not trade, such as investors. Exemptions include Government securities savings certificates, life assurance and main dwelling property.

An increase in the value of invested capital.

This is a type of occupational pension that calculates how much money will be paid into the scheme, but does not guarantee how much money will be paid out. The final amount the employee will receive depends on the investment performance of the money put into the scheme. The contribution levels are decided by the employer running the scheme and are normally a percentage of an employer's salary. Each member on the scheme's pension builds up an individual account within this fund.

A price that is below the nominal value of a share, bond, trust or other security.

The distribution of part of the earnings of a company to its shareholders.

These plans allow homeowners of retirement age to release either a cash lump sum or regular income from the equity in their property.

There are two forms of plan. One is a lifetime mortgage on the property. The other is where the provider 'buys' a proportion of the property. In either case the homeowner can remain in their home until they die or need to go into long term care.

This is a type of occupational pension that calculates the amount of pension that the employee will receive on retirement in advance based on their salary. Fewer employers are, however, offering this type of scheme, as the cost is unknown. It may also be called a defined benefit scheme.

The individual responsible for making decisions related to any portfolio of investments loften an investment trust, pension fund or insurance fund) in accordance with the stated goals of the fund.

An ISA is a tax-efficient 'wrapper' for collective investments, which allows investors to save up to £7,000 each tax year. This means that you do not pay Capital Gains Tax or Income Tax on the proceeds. Unlike pensions, there is no tax relief on payments into an Isa. If you invest in interest-producing funds, the Isa manager can reclaim a tax credit of 20% of the gross income from the Inland Revenue and credit it to your Isa. For all other equity funds, the Isa manager can reclaim a tax credit of 10% of the gross income from the Inland Revenue until 5 April 2004. After that, this benefit will stop.

The tax paid on assets inherited which are worth more than £263,000 at the time of death. The current tax rate payable on the excess stands at 40%.

A company that invests the funds provided by shareholders in a wide variety of securities. It is listed on the stock exchange, but its main concern is to invest in the shares of other companies. Investors buy shares in the investment trust.

This account allows investors to place their full annual allowance with one Isa manager. You can invest £3,000 in cash, up to £1,000 in insurance, or the full £7,000 or remaining balance into stocks and shares.

This account allows investors increased flexibility as it permits different Isa managers for each component. The amount that can be invested is predetermined across all three categories - up to £3,000 cash, up to £1,000 in insurance and up to £3,000 in stocks and shares.

A pension scheme set up and run by an employer for its employees, which is subject to occupational pension rules.

In an Oeic, investors purchase shares rather than units. They work on a 'single-pricing' basis. Oeics can operate a number of different funds and investors can move between these funds without incurring charges.

An amount in excess of the nominal value of a share, bond, trust or other security.

A company set up to protect the interests of equity release customers. All SHIP members adhere to a code of practice and provide customers with a guarantee they will not be left with negative equity as a result of taking out an equity release plan.

~ Companies listed in the stock exchange are divided up into shares that can be bought or sold. Shareholders have a legal right to part of the company's profits, usually by payment of a dividend, and voting rights attached to the share.

A low-cost personal pension that allows both earners and non-earners to build up a pension fund.

A fixed-interest security issued by the Government, local authority or a company in fixed units. They are dealt in on the stock exchange at prices that fluctuate

A pension scheme in which the benefits depend on the performance of a portfolio of investments.

An investment fund managed by a fund manager and made up of a portfolio of different shares. It allows individual investors to buy units in it. Small investors can get exposure to a diverse range of holdings and risk that an investment of this size would not usually allow.

A document containing instructions relating to the disposal of someone's assets after their death. To be legally binding it must be signed by the person (testator), or under instruction from them and in their presence. It must also be witnessed and signed by two people who are not beneficiaries of the will.

The amount of income generated by a fund's investment in relation to the price.

A type of share that produces no income, but steady growth. They mature on a fixed date at a fixed rate.

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This web-site was last updated on 29/07/2008

Specialist Dental Accountants for over 27 years.

Copyright © 2003-2008 Mac Kotecha & Company. All rights Reserved. The information on this site is for general guidance only. It is essential to take professional advice on specific issues about their impact on any individual or entity. No liability can be accepted for any errors or omission or for any person acting or refraining from acting on the information provided on this site.

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