Terminology

Bond: A fixed-interest security. The issuer agrees to pay the purchaser a set principal amount on a specific future date and a series of annual or semi-annual interest payments. This is considered a low-risk investment as the principal is guaranteed.

Gilts: Treasury securities issued by the British treasury.

Pooled investments: Unit trusts, mutual fund and unit-linked funds are pooled investments, or products that combine funds from many investors. The large size of the fund enables the company to employ a professional manager to construct a diversified investment portfolio. Unit trust, mutual fund or unit-linked fund investors purchase units or shares in the fund rather than directly purchasing a certain number of stocks. The value of the shares rises or falls based on the combined performance of the underlying assets.

Stock/share: Also called equities, stocks represent ownership in a particular company.