The interest rate after the effects of inflation have been removed – e.g., interest rates that are high may be relatively low in “real” terms if inflation is also high.

The Return from an investment adjusted to consider the effect of inflation.

In general terms, a recession is significant economic decline, when the GDP (Gross Domestic Product – the value of all the goods and services a country produces in a year) goes down.

To be precise, for an economy to be in recession, it must have experienced 2 successive quarters of falling GDP.

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.