The National Association of Securities Dealers Automated Quotation. A US-based stock exchange, originally only for smaller or new companies, often high¬-tech, but now includes big companies, including Microsoft.

A UK tax paid by most employers and employees. For the employed it is deducted from income by the employer on a scale related to income levels. The self-employed pay contributions based on profit and like the unemployed may pay a flat-rate voluntary contribution to keep their benefit entitlements up to date. Originally set up to fund the NHS and social security benefits, the funds are not ring-fenced. It’s a general tax.

When the current value of your home is less than the amount you owe the mortgage lender.

The sum remaining, when all appropriate deductions have been made.

The value of the underlying assets in an investment trust.

This is what an asset cost, as recorded in the accounts, less any depreciation for age and wear.

Interest received on a savings account after income tax and charges have been deducted.

Pension contributions taken from bank accounts or after-tax salary. Tax relief is claimed back from HMRC by the pension provider.

The face value of something, for example a share issue. In economics, the term nominal refers to money.

A company pension where the employee does not make any type of direct contribution. It is entirely funded by the employer.

Refers to the date at which a member of a pension scheme normally becomes entitled to receive his/her retirement benefits. This does not have to be the same as the State Pension Age

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.