Glossary

Australian Business Number (ABN)  An ABN is a unique 11 digit identifier that makes it easier for businesses / company’s and all levels of government to interact.  For example, you will require an ABN to confirm your business/ trust identity to others when opening business accounts and transacting.
 Australian Company Number (ACN)  Every company in Australia is issued with a unique, 9 digit number when registered as a part of a simplified national system of company registration.  This must be displayed on all company documents and is used
 Approved Deposit-Taking Institutions (ADIs)  ADI is an Australian government term for a corporation which is authorised under the Banking Act 1959 to take deposits from customers.  ADIs include banks, building societies and credit unions.
 APRA  Australian Prudential Regulation Authority (APRA) is the prudential regulator of  banks, insurance companies and superannuation funds, credit unions, building societies and friendly societies
 Australian Securities and Investment Commission (ASIC)  ASIC is Australia’s corporate, markets and financial services regulator
 Australian Taxation Office (ATO)  The ATO is the Australian government’s principal revenue collection agency.  The ATO manages and shapes the tax and superannuation systems that support and fund services for all Australian’s.
 Australian Government Guarantee  The Australian government guarantees deposits up to $250,000 per account holder per ADI
 Contract  Evidence on paper of ownership of a Term Deposit
 Coupons  A certificate attached to a bond, which specifies the interest rate payable.
 Credit Rating  The comparison of the financial standing of a company, financial institution, or government to other such entities.
 Financial Market  The trading environment for the buying and selling of futures contracts, securities and currency.
 Fixed Interest Investments  These investments offer investors a regular income for a specified term with the expectation that the initial investment amount (principal) will be repaid at the end of the term (maturity date).
 Floating Rate  An interest rate which reflects the movement in the market rates rather than staying constant throughout the life of the loan.
 Foreign Account Tax compliance Act (FATCA)  Foreign Account Tax Compliance Act is the United States (US) legislation aimed at improving compliance with US tax laws. FATCA imposes certain due diligence and reporting obligations on foreign (non-US) financial institutions, including the obligation to report US citizen or US tax resident accounts to the US Federal Revenue Service(IRS). These details are not reported direct from Australian ADI’s, but via the ATO.
 FSG  Financial Services Guide
 Gross Domestic Product (GDP)  GDP is the total value of goods and services produced in Australia.
 Inflation  An increase in the prices of goods and services caused by an abundance of money chasing too few goods and services.
 Interest  The payment made by a borrower to a lender in return for the loan of money, on top of principal repayments
 Maturity  The date when a Term Deposit is due for repayment by the Issuer.  The principal plus any interest accrued will be repaid on this date.
 Monetary Expansion Policy  A policy by monetary authorities to expand money supply and boost economic activity, mainly by keeping interest rates low to encourage borrowing by companies, individuals and banks.
 Portfolio Construction  The process of choosing the constitution of one’s investments, in terms of asset classes and proportion of shares
 Principal  The original dollar amount invested
 Reserve Bank of Australia (RBA) The main responsibility of the RBA is monetary policy.  Other major roles are maintaining financial system stability and promoting the safety and efficiency of the payments system.  The bank manages Australia’s foreign reserves, issues Australian currency notes and serves as banker to the Australian Government.
 Rollover  The renewal or continuity of a Term Deposit at the maturity date
 Self Managed Superannuation Fund (SMSF) SMSF’s are super funds where the members are also the trustee/s of the fund, generally established for a small number individuals and regulated by the ATO.  A SMSF typically has four or less member, and if using a Corporate Trustee, the members are also Director’s of the Company.  Trustees of superannuation funds have total control and responsibility over the fund and investment strategy.
 Share Buy Back  When a company notify’s the current shareholders that they will be making an offer to purchase their shares.
 The Superannuation Industry (Supervision) Act 1993 (SIS Act)  This is the primary legislation which. determines how superannuation funds operate and what they can and cannot do.  It is administered by APRA and ASIC.
 Subordinated Debt  Unsecured bonds that in the event of liquidation, rank after other debt, but in front of shareholders.
 Term Deposit  A non-tradable fixed-income investment with maturity’s that range form 1 month to 5 years (or more).  When a Term Deposit is created, the lender (or investor) understands that the funds are not accessible until the term has ended.  If they wish to withdraw the funds at an earlier date, a fee may be payable for obtaining the funds prior to the maturity date.  The terms and conditions for each investment should be read and understood in full by the investor prior to the commencement.
 Trust Deed  A Trust deed is a legal document that sets out the rules for establishing and operating a superannuation fund.  It includes such things as the funds’s objectives, who can be a member and how benefits can be paid.  The trust deed together with superannuation legislation and laws form the fund’s governing rules.
 Yield  The effective percentage return earned by an investment in a stock or bond, usually expressed as a percentage of the current market price.
 Yield curve A graphical representation of the relationship between bond yields and maturity lengths.

Register

Loading...