Glossary of Terms


Something that has an attributed worth and has the capacity to generate revenue.


Short for Australian Securities Exchange. A marketplace facilitating exchanges across a range of asset classes, including listing, trading, clearing and settlement.


Australian Taxation Office

Australian Securities and Investments Commission (ASIC)

The Federal Government body responsible for administering and enforcing the Corporations Act and laws to protect consumers in the areas of superannuation, investments, insurance and banking.


A plan that aims to project and provide limits to expenditure (based on incomings and known outgoings) during a specific period of time. In the context of an individual, a budget would take a person’s income and allocate it according to needs such as bills, spending/living expenses and savings, over an income period.

Capital gains tax (CGT)

A tax on the profits made from the purchase or sale of certain assets.

Capital growth

The increase in value seen in an asset or investment. Calculated by determining the difference between the current value versus the original purchase price, where the result is a positive number.


All money coming in and out of an account by way of income and expenses.

Compound interest

Interest paid on both the original principal invested and any accumulated interest on money invested or borrowed.

Concessional contributions

Superannuation contributions made from before-tax income for which a tax deduction can be claimed. They are also referred to as deductible contributions. Concessional contributions include employer Superannuation Guarantee (SG) contributions, additional employer contributions (salary sacrifice) and contributions made by the self-employed for which they claim a tax deduction.


A debt is money that is owed. Another name for a debt is a liability. Source:

Debt consolidation

When multiple loans are combined into a single loan with the intention of lowering repayments.


The amount a company pays out to its shareholders from its after tax earnings. For individual shareholders, the payout is in proportion to the number of shares held. When company profits are down, the company may decide to pay a reduced dividend, or no dividend at all.

Estate planning

The process of arranging the management of a person’s assets and liabilities during a person’s life and after death with the intention of minimising tax implications.




Also known as borrowing to invest. A way of obtaining additional funds to invest, with the hope of gaining significant returns in the longer term. There are three levels of gearing. These are positive, neutral and negative.

Income protection insurance

Insurance that pays benefits to you if you are unable to work due to illness or accident.


A charge to a borrower for the use of a lender’s money. For example, if money is borrowed from a bank to buy a house (mortgage loan), the bank will charge a percentage of the total borrowed as interest for the use of the money.

Interest-only loan

In this type of loan, a borrower will only pay interest for a limited and defined period during the life a loan. After this interest-only period ceases, repayments become higher as the life of the loan has not changed; the borrower will need to catch up on the repayments delayed during the interest only period.


An asset acquired with the intention of generating revenue over time.

Lenders mortgage insurance (LMI)

Insurance taken out by a bank (at an additional cost to the borrower) to protect themselves in the event the borrower becomes unable to pay what they owe on a loan. This type of insurance generally comes into play when a person borrows greater than or equal to 80% a property’s value.


A debt or money owed, such as a loan. In contrast to an asset, a liability detracts from revenue.

Limited Recourse Borrowing Agreement (LRBA)

A type of loan from a third party lender, used primarily within SMSFs, designed such that a trustee can use the funds to purchase a single asset (or group of identical assets with equal market value). In the event of a loan default, the lender’s claim is limited to the asset(s) purchased with the loan.

Managed fund

An investment type supported by the security or collateral from multiple different investors.

Negative gearing

Where the income is less than the costs of owning and running that investment. In other words, there is a financial loss created by owning that investment (before capital growth or other benefits are considered).

Neutral gearing

Where the income of the asset is equal to the costs of owning and running that investment.

Off-the-plan property

Property which is available for purchase in development stages, prior to completion.


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.


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.


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


Reserve Bank of Australia


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.


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.


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.


The return of an investment, expressed as a percentage. Can also refer to the profit that an investment is likely to return.

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