Financial Jargon

Confused Man

The world of finance can be a confusing place at the best of times, speak to an IFA, an accountant or even a bank manger and you may find yourself hearing strange new words that mean absolutely nothing to you. In this situation the easiest option would be to nod along, make knowing facial expressions and utter things like “hmm, yes” at points of extreme confusion, in the vain hope that your facade will not be exposed, and that you’ll walk away from the conversation with an adequate amount of information.

If you fall into this category then luckily help is at hand. Expat & Offshore have compiled a handy jargon buster, giving you the meanings of a variety of baffling financial terms, so read on, take in and then prepare to dazzle your friends with your exciting new vocabulary!


This financial acronym stands for Annual Equivalent Rate, which is the interest rate that is given on current and savings accounts after one year of the account being opened.


APR stands for Annual Percentage Rate and it is the amount of interest you will pay on things such as bank loans, mortgages and credit cards, meaning the lower the APR, the better rate you get. Proving that our handy guide has a purpose, 71 percent of 16-18 year olds said that they thought a high APR was actually a good thing.


An annuity is something that comes into play as you approach your retirement years. Simply put, an annuity is an income plan that you must purchase from pension providers who will then provide you with your pension income. They are in place so that pensions can remain regulated, and OAPs won’t be able to squander their whole pension pot on one colossal bingo blowout.

Bear and Bull Markets

In the world of finance the bear and the bull are two names given to two contrasting stock markets. A bear market usually comes with low returns, dwindling share prices and a generally pessimistic outlook, where as a bull market is strong and optimistic.


A bond is where you make an investment by giving money to the company who own the bond, the money is then paid back to you over a period of time, with added interest to make it worth your while. A bond is not an investment that will bring you back a huge return, but to its advantage it is a minimal risk investment.

Compound Interest

Compound interest is when you are in the fortunate position of earning interest on interest that has already been paid.


Domicile is an important word to get to know if you are interested in overseas tax options, it is a fairly broad term and it refers to the place where you have made your permanent home. People who wish to leave their country of residence for tax purposes may become non-residents but they can still be domiciled to their original country. You are originally assigned the same domicile as your parents when you are born, however when you become an adult you can change this by permanently moving away, if it became a tax issue you would have to extensively prove that your move is a permanent one.


Equity is a word that can have a number of meanings, in the loose financial sense it basically means value, such as the value of a home or shares.


A Gilt is a bond that comes from the Government itself, also known as a risk-free bond. With Government gilts you know that you will always be paid the money you are owed.


A gross sum is the amount of money you receive before tax. Once tax has been taken off it becomes your net amount. Gross income and net income can differ greatly from country to country.


An IFA is an independent financial adviser, someone who is an expert in the world of finance, someone who has the necessary qualifications to advise on and also sell you a number of different financial products. When meeting with an IFA you will generally be treated in a very personal and helpful manner, as an IFA’s main role is to give you advice tailor made for your specific circumstances.


Being intestate means you have passed away without leaving a will, and this could prove to be very troublesome for the people you leave behind. Without a will everything you leave behind will be automatically handed over to your next of kin, and if that’s not what you had in mind a lot of friction could be borne out of it. Basically, write a will.

Junk Bonds

A junk bond is a bond that offers high level of return, but also comes with an increased level of risk.


Stands for open ended investment company, which means it is a company that is free to make investments in other companies. The open-ended part also refers to the fact that the amount of shares issued can be increased or decreased at their choosing.

Offshore Jurisdiction

An offshore jurisdiction, or offshore financial centre, is generally what you call small areas that offer low-tax benefits and various different financial services for overseas residents.


An option is basically the contract that gives prospective buyers the ‘option’ of purchasing or selling the stock at a selected price at some point in the future.


QROPS stands for Qualifying Recognised Overseas Pension Scheme, it is a pension scheme that is held offshore, out of the United Kingdom. Such pensions allow tax free pension transfers providing you are non-UK resident.

Please note, you can only utilise a QROPS if you are between the ages of 18 to 75; and are a non-resident British citizen, or intend to be within the next 12 months, or if you are not a UK citizen and are planning to leave the UK within one year.


Standing for Qualifying Non-UK Pension Scheme, the QNUPS was introduced to rectify an error made in the 2004 UK Finance act which led to QROPS money being subjected to UK inheritance tax. Now, pensions transferred via a QNUPS will be free from inheritance tax.


SIPP stands for Self Invested Personal Pension. A SIPP allows more flexibility than a standard pension, yet is more expensive.

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