Glossary of terms

Feeling bamboozled? Get to grips with the language of ISAs with our glossary. Know the difference between everything from asset-backed to capital gain - you’ll be an expert before you know it!

I

Income

Money you receive through wages or capital gains

Income tax

This is the tax you pay on your income.

Individual savings accounts

An account in which a singular person can save money.

Inflation

The increase in prices over time.

Innovative Finance ISA

An individual savings account that allows you to invest in peer-to-peer lending and receive tax-free interest.

Interest

Money regularly paid at a particular rate.

Interest (ISAs)

Interest is the income you receive based on the value of the amount you invest. For example, a £1000 investment into a Stocks and Shares ISA with a 4.7% yearly interest will give roughly a £47 return in the first year.

Interest (loans)

A fee charged to the lender when taking out a loan.

Interest rate

The percentage of interest you will receive on top of your investment.

Interest type

What the interest terms are. For example fixed term gives a precise timescale for the length of the ISA. A projected return only provides a guideline interest rate.

Invest in

Relevant to Innovative Finance ISAs or a financial product that uses your capital towards an investment. You can gauge a level of understanding as to where your money will be going.

Investment

Putting money into something with the goal of generating money.

Issuer

An individual or company that supplies or distributes something.

L

Loans

Money borrowed to be paid back with interest.

M

Minimum

The minimum depends on the minimum amount that you need to invest in your ISA.

Minimum initial deposit

The minimum deposit you need to invest to open the account.

O

Online account

Your account is managed online only.

Organisation

A company or a business.

P

P.A.

Per annum (per year).

Peer-to-peer lending (P2P)

Borrowing money from other individuals/groups without the middleman (the banks).

Pension

A payment received after retirement age.

Portfolio

A collection of all of your investments.

Profit

A financial gain.

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