An investment approach that aims to mirror or track the performance of a financial index. Also known as Tracker Funds. This is normally done by either investing in the exact constituents of an index or by taking a representative sample of that index. The managers of the fund have lower expenses than active fund managers, and the charges to investors are therefore lower.

An employer collects income tax and national insurance. These are collected from employees’ pay and the employer pays it to HMRC. This system is called Pay As You Earn (PAYE).

The person that money is being paid to.

This insurance covers people’s finance agreement repayments if they cannot work because of long−term illness or redundancy. Fell into disrepute owing to significant mis-selling.

This is a type of annuity usually bought with the proceeds of an HMRC registered pension scheme. Provides a fixed annual income for the rest of your life.

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.