P-T

Pension

An income stream that makes regular income payments in retirement.

Periodic lease/tenancy

At the end of a fixed term lease agreement, in Victoria, a tenant will move into a tenancy without a fixed end date.

Portfolio

An investor’s range of investment holdings. Usually it refers to its composition, i.e. the mix of different asset classes or, if in a single asset class like shares, the mix of different sectors and shares.

Positive gearing

Where the levels of borrowings are such that the income is in excess of the costs of interest on borrowings and owning the investment (costs could include fees such as property management, administration and owners’ corporation). So, for example, the rent from your investment property is higher than the total of all the costs to hold the property.

Principal

The initial sum of money invested, or the amount borrowed or left owing on a loan.

RBA

Reserve Bank of Australia

Refinance

Taking an existing loan and replacing it with a new one, or extending the loan period. May be done within the same loan provider or moved across to a different provider.

Risk

The possibility that something bad/unfavourable will happen. In the context of an investment, a risk is the possibility that your investment will not increase in value as expected, but decrease or not move in value at all.

Salary packaging

A system of an employer allowing the packaging benefits such as union membership, private health, with an employee’s salary so that these expenses are covered before tax is taken out.

SMSF

Short for Self Managed Superannuation Fund. As the name suggests, this is a type of super fund managed by you as an individual or as part of a trust (up to four members).

Stamp duty

A tax on transactions such as property transfers, mortgages and car registrations imposed at a state level.

Superannuation (super)

A fund of money contributed to by you and your employer(s) during your working life to fund your life in retirement.

Superannuation Guarantee (SG)

Employer contributions are usually called Superannuation Guarantee (SG) contributions. Currently the minimum level of SG contributions is the equivalent of 9% of ordinary time earnings. This money is not taken out of your wage or salary; it is paid in addition to your wage or salary. An annual contribution limit applies.

Tax deductible debt

Debt that provides access to capital to invest while providing tax deductions.