Jargon Buster

Alternative Investment Market. London's market for smaller, growing companies. Higher risk, higher potential reward. Some AIM shares qualify for IHT relief.

How you split your money between different types of investments (stocks, bonds, cash, property). The biggest driver of long-term returns.

When prices drop 20%+ from their peak. The bear swipes downward. Time to stay calm.

How much a stock moves relative to the market. Beta 1 = moves with market. Beta 2 = twice as volatile. Beta 0.5 = half as volatile.

The gap between what buyers will pay and sellers will accept. A hidden cost of trading. Tighter spread = better deal.

The original cryptocurrency, created in 2009. Fixed supply of 21 million coins. Often called 'digital gold'. Highly volatile but the most established crypto.

A shared digital ledger that records every transaction. Like a Google Doc everyone can read but nobody can secretly edit. The tech behind all crypto.

A loan you make to a company or government. They pay you interest and return your money after a set period.

When prices are rising and everyone is optimistic. The bull charges upward.

Tax on profit when you sell an investment. 10% or 20% depending on your income. Annual allowance of GBP 3,000. ISAs avoid this entirely.

GBP 3,000 per year (2024/25) of capital gains you can make tax-free. Down from GBP 12,300 in 2022/23. Another reason to use ISAs.

A tax-free savings account the government set up for every child born between Sep 2002 and Jan 2011. GBP 250 starter, matures at 18. 758,000 still unclaimed.

A physical device (like Ledger or Trezor) that stores crypto offline. Most secure option. Essential for large holdings. 'Not your keys, not your coins.'

Earning interest on your interest. The snowball effect that makes early investing so powerful. Start at 18, not 30.

Protects your belongings (phone, laptop, clothes) against theft, fire, and flood. Only 54% of UK renters have it. Typically GBP 10-15/month.

Where you store cryptocurrency. Hot wallets (apps) are convenient but hackable. Cold wallets (hardware devices) are secure but less accessible.

When a Child Trust Fund holder turns 18, ownership transfers to them. Options: withdraw, transfer to ISA (doesn't use your GBP 20K allowance), or leave in protected account.

If you don't claim your CTF at 18, it moves to a 'protected account'. Still tax-free but often poor returns and high fees. Claim it and make an active choice.

Monthly debt payments / gross monthly income x 100. Under 20% = excellent. Over 40% = difficult to get a mortgage. Reduce debts before applying.

Financial services built on blockchain without banks. Lending, borrowing, and trading via smart contracts. High yields but also high risk of bugs and scams.

Don't put all your eggs in one basket. Spread investments across companies, sectors, and countries. The only "free lunch" in investing.

A payment companies make to shareholders from their profits. Like getting a thank-you cut just for holding their stock.

Tax on dividend income above the GBP 500 allowance. 8.75% (basic), 33.75% (higher). ISAs avoid this entirely.

Investing a fixed amount regularly (e.g. GBP 200/month) regardless of price. Smooths out volatility. The boring strategy that works.

The peak-to-trough decline of an investment. A 30% drawdown means your GBP 10,000 dropped to GBP 7,000. How long to recover matters.

'Do Your Own Research'. Crypto community mantra. Means: check the team, tokenomics, use case, and risks before investing. Don't rely on influencer tips.

Exchange-Traded Fund. Like an index fund but trades on the stock exchange like a share. Often even cheaper fees.

A blockchain platform for smart contracts and decentralised apps. Second-largest crypto. Switched to energy-efficient Proof of Stake in 2022.

The amount you pay toward a claim before insurance kicks in. Higher excess = lower premium. Voluntary excess on top of compulsory excess.

Interest rate locked for a set period (usually 2-5 years). Monthly payments stay the same. Most popular choice for first-time buyers.

'Fear Of Missing Out'. The panic of seeing others profit while you haven't invested. A leading cause of buying at the top. Recognise it, resist it.

You own the property AND the land it sits on. Most houses are freehold. No ground rent. Full control over your home.

The 100 largest companies on the London Stock Exchange. The UK's main stock market index. "The Footsie."

The next 250 largest UK companies after the FTSE 100. More UK-focused and historically higher returns (but more volatile).

The cost to process a transaction on Ethereum. Varies with network demand. Can be pennies or pounds. Layer 2 solutions like Polygon reduce these costs.

A UK government bond. Very low risk — the government borrowing money from you. Returns are modest but reliable.

The 25% bonus on LISA contributions. Put in GBP 4,000, get GBP 1,000 free. Max GBP 32K in free money over your lifetime.

Crypto slang for 'hold' — originating from a typo. Means holding your crypto through volatility instead of panic selling. Not always wise.

Pays 50-70% of your salary if you can't work due to illness/injury. Has a waiting period (4-13 weeks). The most underrated insurance for young adults.

A benchmark that tracks a group of stocks. The FTSE 100 is an index. The S&P 500 is an index.

A fund that copies an index. Buy a FTSE 100 index fund and you own a piece of all 100 companies. Low fees, maximum diversification.

When prices go up over time and your money buys less. If your savings don't beat inflation, you're quietly losing money.

Tax on your estate when you die. 40% above GBP 325K threshold. AIM shares and pensions can help reduce this.

The amount you pay for insurance cover, usually monthly or annually. Paying annually is almost always cheaper than monthly.

A company that invests in other companies. Traded on the stock exchange. Can trade at a premium or discount to its assets.

Initial Public Offering. When a private company first sells shares to the public. Often hyped, often volatile.

Individual Savings Account. A tax-free wrapper for your savings and investments. The UK's best deal for growing wealth.

GBP 20,000 per tax year (April to April). Shared across ALL your ISA types. Use it or lose it — it doesn't roll over.

A tax-free savings/investment account for under-18s. GBP 9K annual limit. Converts to adult ISA at 18.

You own the property but NOT the land — you lease it. Common for flats. Watch for: ground rent, service charges, lease length (below 80 years = problematic).

Save up to GBP 4K/year and get a 25% government bonus. For your first home or retirement. Ages 18-39 to open.

How quickly you can convert an investment to cash. Stocks are liquid; property is not.

Mortgage amount / property value. 90% LTV = 10% deposit. Lower LTV = better rates. 80% LTV is the sweet spot for competitive deals.

The total value of all a company's shares. Share price x number of shares = how much the whole company is worth.

A loan to buy property, secured against the property itself. If you stop paying, the lender can repossess. Typical term: 25-35 years.

A pool of money from many investors, managed by a professional. Higher fees than index funds. Most don't beat the index.

UK government savings institution. Offers Premium Bonds, savings accounts, and income bonds. 100% government-backed — the safest place for cash.

A unique digital certificate of ownership on a blockchain. Used for digital art, collectibles, and gaming items. Market has cooled significantly since 2021 peak.

Discount on car insurance for each claim-free year. Worth up to 75% off after 5+ years. Protect it — consider whether small claims are worth losing it.

Discontinued in 2017. 5-year fixed savings bonds for under-16s at ~2% AER tax-free. About 800,000 accounts still exist — check if you have one.

Ongoing Charge Figure. The annual fee a fund charges. 0.07% is great. 1.5% is robbery. Always check this before investing.

Price-to-Earnings ratio. How "expensive" a stock is relative to profits. P/E of 15 = you pay 15x annual earnings. Under 15 = cheap-ish.

Long-term retirement savings with tax benefits. Workplace pension (employer contributes) and SIPP (you choose investments). Can't access until 57+.

Your collection of investments. Stocks, bonds, funds — everything you own in one basket.

NS&I savings product where your money enters monthly prize draws instead of earning interest. Tax-free prizes from GBP 25 to GBP 1M. Safe but won't grow your capital.

Your investment return minus inflation. 8% return with 3% inflation = 5% real return. This is what actually matters.

Adjusting your portfolio back to your target allocation. If stocks boom and become 80% of your portfolio, sell some and buy bonds.

How much loss you can stomach without panic-selling. If a 20% drop makes you sell everything, you need less risk.

A crypto scam where creators hype a token, wait for investment, then drain all funds and disappear. Common with new meme coins and DeFi projects.

Buy a 10-75% share, rent the rest. Income under GBP 80K (GBP 90K London). Can buy more shares later ('staircasing'). Good first step onto the ladder.

Return per unit of risk. Higher is better. Above 1 = good, above 2 = great. Helps compare investments on a level playing field.

Self-Invested Personal Pension. You choose your own investments and get tax relief. GBP 60K/year limit. Access from age 57.

A crypto pegged to a stable asset like USD. USDC and USDT aim to always equal $1. Used for trading and yield — but not all are equally trustworthy.

Locking up your crypto to help secure a Proof of Stake network. You earn rewards (like interest). Risk: your staked crypto can still lose value.

Tax on property purchases. First-time buyers: 0% on first GBP 300K, 5% on GBP 300K-500K. Non-FTB: starts at GBP 250K. Paid at completion.

0.5% tax when you buy UK shares. Not charged on ETFs or AIM stocks. A small cost to be aware of.

A tiny piece of ownership in a company. Buy a share of Apple and you literally own a fraction of Apple.

An ISA that lets you invest in shares, funds, and bonds tax-free. GBP 20K per year limit. No tax on gains, dividends, or interest.

The government tops up your pension contributions. Basic rate: pay GBP 80, get GBP 100 in your pension. Higher rate: even more.

Runs from 6 April to 5 April. When your ISA allowance resets. The most important date for UK investors.

"Time in the market beats timing the market." Staying invested long-term historically outperforms trying to buy low and sell high.

Rate follows the Bank of England base rate plus a margin. Transparent: you know exactly why your rate changed. Goes up and down with base rate.

Interest rate can change. Includes tracker, discount, and SVR mortgages. Potentially cheaper but less predictable monthly payments.

How much a price bounces around. High volatility = big swings. Crypto is very volatile. Government bonds are not.

Points you earn by learning on Mustard — completing lessons, passing quizzes, and keeping your streak going. XP fills your level bar and unlocks badges. It is progress, not money: you can't spend it or withdraw it.

Annual income as a percentage of price. A 4% yield on a GBP 100 stock = GBP 4/year in dividends.