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23rd February 2010
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11th January 2010
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Investment Jargon Explained

Investment A - Z Explained - Please Choose A Letter:
                   
A Back To The Top
Alternative Investment An alternative investment is an investment product that is not one of the traditional investments such as stocks, bonds, or cash. Recently alternative investments have included profit sharing in businesses and renewable energy.
Auction The sale of a collectible or property to the highest bidder.
Autographs A form of alternative investment: strong capital growth for autographs of the rich and famous.
B Back To The Top
Biofuels A form of alternative energy and potential investment. Solid, liquid or gaseous fuels but having mixed reviews as to its effectiveness and level of carbon emissions.
BMV Below Market Value. Typically used in the property and antique industries.
Bridging Loan A short-term loan to cover a shortfall between investment transactions.
Business Angel An investor who provides capital to either begin or expand a business.
Buy to Let A property that is purchased for investment rather than to live in. Income is derived from the tenants renting the property and any renewable energy installations, subject to feed-in tariff law. Capital growth is also achieved in an up market if the property if sold.
C Back To The Top
Capital Growth A profit gained from selling an asset for more than the original purchase price.
Carbon Trading An economic incentive provision for countries and businesses to reduce their carbon emissions.
Cashflow Positive When the income exceeds the outgoings. Most commonly used in buy-to-let property investment to describe the rental situation on a monthly basis (or cashflow negative of course if the monthly costs exceed the monthly income).
Classic Cars A form of alternative investment. Classic cars from vintage eras have seen huge rises in values in similar ways to other vintage alternative investments such as art, wine, coins and stamps.
Coins Another form of alternative vintage investment (see “Classic cars” as above).
Commodities A physical, tradable asset which has no major differential in quality. Examples of commonly traded commodities are gold, silver, lead, rice and sugar.
Completion Usually a property term for the time period when the outstanding balance for the purchase is paid and the new owner can legally take possession and enter the property.
Conveyancing The legal term for the selling/purchase of a property.
Covenants Obligations and restrictions when legally forming contracts for finance agreements or property in general.
Currency Trading One or indeed multiple transactions to and from a number of currencies. The trade is designed to profit from the currency re-adjustments on an hourly, daily or weekly basis in the main.
D Back To The Top
Demographic Profile A section of the population within a market (refers to class, age, sex, gender).
Deposit An agreed percentage of a purchase price (usually property) that is paid prior to the final transaction (called completion)
Developer A company or person who is in charge of the building of residential or commercial property.
Dilapidations Damage of repair, mostly with regard to property.
Draft Contract A preliminary version of the contract used to exchange in property or renewable energy.
Due Diligence A process usually performed by the prospective buyer, to make sure all is in order legally.
E Back To The Top
Entry Level Another term for deposit, as above.
Equity A term used to describe held value (e.g. equity in a company through the holding of shares, or the holding of financial value in a property over and above the original price that was paid).
Escrow Account A third party, typically a bank or a solicitor, who holds a buyer's funds to provide security before the final transaction. Usually the holding of funds is whilst the due diligence (see above) process is being completed.
Exchange A property term used in the purchase process. This is the point in which the sale and purchase of a property is legally binding. Through the swapping of contracts and the agreeing on a completion date. The actual time for exchange varies from country to country.
Exchange Bond A bond used in property to guarantee the payment of the deposit by the buyer upon completion.
F Back To The Top
Fashion Investment (vintage) Another type of alternative investment based on value increases over a period of time.
Feed-in Tariff Law A relatively new law in a variety of countries to incentivise producers of renewable energy by giving them an ongoing fixed income.
Film Investing An increasingly popular form of investing with high ROIs if the film isa big hit. Very risky with large losses if it doesn't though.
Freehold The legal right to own your property and land.
G Back To The Top
Gazumping A relatively common occurrence in an up-market when the seller of a property accepts a higher offer than they have already accepted.
Gazundering A relatively common occurrence in a down-market when the potential buyer re-offers at a lower price than was accepted by the seller on the day of exchange.
Gold Investments The process of buying gold at a low price to sell at a higher price in the future in order to make a profit. Very popular with “goldbugs” who believe that gold will eventually replace global fiat currencies as the right form of value comparison.
Grant A donation by one party to another, usually as an incentive to produce a form of industry (e.g. government solar grants in order to build a renewable infrastructure)
Gross Price The market value/price before any discount.
Guarantee zero-risk: whatever your investing in, it will definitely happen. Common with property in terms of rent guarantees.
H Back To The Top
HMO A House of Multiple Occupancy. Renting a property to more than one person under separate contracts. This usually applies to low income tenants, i.e. students or DHSS tenants.
Horse-racing Syndicates A number of friends or business partners usually club together to buy horses and split the winnings.
Hotspot An area/region that is extremely popular to buy I because of a strong investment case or evidence of rising house prices.
I Back To The Top
IFA Independent Financial Advisor. A professional qualified to give financial advice to investors on life insurance, pensions, funds, and other financial products, and who is not tied to any sole financial institution.
Income Cash earned on an investment.
L Back To The Top
Land Registry The body responsible for keeping accurate records of who owns the land in a region or country.
Landlord Insurance A useful insurance product which in particular covers the landlord in case of loss of rental income.
Lease A legal document that enables the freeholder or landlord to let the property to another party for a specific length of time after which point the ownership reverts back to the freeholder.
Loss The selling of an investment for less than it was bought for.
M Back To The Top
Mortgage A loan given to a purchaser of property in order for the purchaser to meet the asking price. The loan comes with a interest rate to be paid back in a set period of time.
N Back To The Top
Negative Equity When the property owner's mortgage or loan amount is more than the value of the property.
Net Price The discounted price that a purchaser pays for the property.
No Money Down Deal The term used to describe a deal where the purchaser is able to buy without the need for a deposit. This typically involves negotiating a discount from market value and the use of a creative financing technique such as the ‘bridge and remortgage’. Other forms of No Money Down deals can involve a gifted deposit or cash back upon completion from the vendor to effectively cover the deposit required.
O Back To The Top
Off Plan A property that has not been built yet and is able to be bought“ off the architect's plans”.
P Back To The Top
Private Finance Initiatives (PFI) Schemes introduced to the UK and other capitalist nations where previously public assets were passed into private hands with the aim of contracting out services and saving the government money.
Profit The making of financial progress through business activity or investing. In other words, selling an asset for more than it was bought for.
R Back To The Top
REIT Real Estate Investment Trust. A company, usually traded publicly, that manages a portfolio of real estate to earn profits for shareholders.
Renewable Energy The ability to create energy from renewable sources such as the sun, wind and waves, as opposed to traditional finite energy sources such as oil, gas and coal.
Repossession When a court order is obtained by a mortgage company to take full possession of a property due to a lack of mortgage repayments.
Rental Void A period where a property is untenanted.
Rental Yield The percentage of the property price that the annual rental income makes up. If a property is worth £100,000 and the yearly income is £5,000, the rental yield is 5%.
Return On Investment (ROI) A percentage of the investment gained or lost compared to the amount of money deposited
RICS Royal Institute of Chartered Surveyors – the official body that licenses surveyors.
S Back To The Top
Secured Loan A loan given to a borrower by a lender that is backed up by an asset if the loan falls through. A mortgage is a form of secured loan.
SIPP Self-Invested Personal Pension. A type of personal pension giving the policyholder more choice about the investments held than traditional pension policies.
Solar Energy A form of renewable energy that can be harnessed through panels on the ground or on roofs of properties.
Solar Farm A site of large solar panels for the purpose of providing solar energy and electricity.
Stamp Duty Tax paid to the Government by the purchaser of a property at a percentage of the property’s sale price. This ranges from 1% to 4% for properties above £125,000.
Stamp Investments A form of alternative investment. One of the best performing investments in the last 50 years with compound increases in the region of 20% per annum.
Surveyor (Chartered) A professional who is qualified to carry out property inspections.
T Back To The Top
Tenancy The temporary possession of a property by a tenant.
Total Cost Breakdown Cost of the purchaser acquiring an investment, including entry level, financing costs, taxes and associated fees.
Tenant A person who has temporary possession and use of a property that is owned by another person, the landlord.
Title Deeds A document that displays the ownership of the property, and the rights and obligations affecting the property. The mortgage lender holds this document until the mortgage has been met.
Tropical Hardwood A form of alternative investment. An investor effectively bets that the price of growing the hardwood will be more than the investment in a 2-5 year period.
U Back To The Top
Under Offer Where the monthly rental on a property is higher than the monthly mortgage costs.
Unit that will ‘wash its face’ Unit with a rental shortfall Where the monthly rental on a property is less than the monthly mortgage costs.
V Back To The Top
Valuation The market value of an investment such as property as measured by a recognised professional on behalf of a purchaser or lender.
Vendor The owner of a property that is on the market or being sold.
Vintage Postcards A form of alternative investment: Pre-1939 topographical postcards are the most valuable and sell for huge margins on ebay.
W Back To The Top
Wind Energy A form of renewable energy from which an income can be derived from in certain countries using Feed-in tariffs.
Wind Farm A site with wind turbines generating electricity
Wind Turbine A piece of machinery that coverts wind into energy for electricity.
Wine Investing An alternative type of investment. Vintage wines are known to appreciate in value over time and therefore offer a profitable opportunity if chosen correctly.
Y Back To The Top
Yield Income generated from a property or an investment calculated as a percentage of its value.