Glossary of terms

No doubt you've heard the term 'financial jargon'. This glossary provides you with a simple guide to the investment terms you'll find on the RaboPlus website. Click on the alphabet letters below to help yourself to a clearer understanding.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Defensive Assets: Assets that are characterised by lower risk and can be used to try to protect portfolios from making losses. Cash and fixed-interest bonds are known as defensive assets. The downside of defensive assets is that they generally deliver lower returns, sometimes not even enough to keep pace with inflation.
Derivative: A financial instrument that obtains its value from the price of a physical security or an index.
Distribution: Payment of a dividend or capital gain. Shareholders or unit holders may take their distributions in cash or reinvest them in additional shares of the same fund or another fund.
Diversification: Investing in many different asset classes or securities. This reduces the reliance of a portfolio on the performance of any single asset class or security; if one investment is performing poorly, another may perform well and make up for the loss.
Dividend: A payment of cash from a company's profits to its shareholders.
Dividend Imputation: A tax rule which eliminates double taxation on company dividends. If a company has paid tax on its profits and distributes these profits to shareholders as dividends, shareholders don't have to pay tax on this income - it's already been taxed. Also known as franking credits.
Dollar-Cost Averaging: An investment strategy based on making investments of fixed amounts at regular intervals in the same fund or security. The investor buys more shares/units at lower prices and fewer shares/units at higher prices, therefore the average cost of the shares purchased will generally be lower than the average price over the investment period. However, dollar-cost averaging does not ensure a profit or protect against a loss in a declining market.