Finance jargon can be tough to keep up with, here’s the basic lingo to sound like you know what you’re talking about:
ETF (exchange-traded funds)
If you have money in a Raiz account, it’s invested in ETFs. Put simply, ETFs are just funds that are traded on an exchange. ETFs are usually made up of a bundle of stocks, bonds or other investment instruments, which are then wrapped together into one product. For example, if you buy shares of an ETF which tracks the ASX 200, you are actually buying a tiny amount of each company that makes up the ASX 200. ETFs can help investors gain exposure to a range of investment strategies, geographic regions and asset classes.
In a sentence: “I didn’t want to put all my eggs in one basket, so I invested my birthday money in an ETF”.
Capital gains/losses
This is the money you gain or lose when you sell your investment. This gets brought up a lot around tax time as you’ll need to pay tax on any gains you make from your investments. Typically, short-term gains, like those from investments you’ve held for less than a year, are taxed at a much higher rate than long-term gains, while capital losses can be used to offset your gains and lower your tax liability.
In a sentence: “I was stoked my investments did so well this year, shame the tax man took a bit off the top.”
Dividend
A dividend is a company’s way of passing on a share of its profits to its investors. Often dividends are distributed on a quarterly basis, though not all companies issue dividends. Many companies (especially newer and less established ones like start-ups) choose to reinvest their profits back into the company instead.
In a sentence: “I had some good divvies come through this week, every little bit helps!”
Dollar-cost averaging
This is what it’s called when you make consistent, regular investments over a long period of time. By dollar cost averaging, you end up buying fewer shares when stocks are expensive, and more shares when stocks are cheaper. Ever heard the phrase; “it’s about time in the market, not timing the market”? Dollar-cost averaging is the opposite of timing the market since you maintain the same strategy regardless of what the market is doing. Investing small amounts regularly, one of the core principles of the Raiz philosophy, can help build a healthier balance over the long run.
In a sentence: “The market’s all over the shop, good thing I dollar cost average!”
Liquidity
Liquidity describes how easy it is to convert an investment or asset into cash. The money in your bank account is usually the most liquid since it’s instantly available to you. On the other hand, physical assets like real estate or your car are far less liquid, since it could be difficult and time-consuming to sell them and recover your cash.
In a sentence: “I’d love to get the bill for dinner but I’m not very liquid right now”
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If you have read all or any part of our email, website, or communication then you need to know that this is factual information and general advice only. This means it does not consider any person’s particular financial objectives, financial situation, or financial needs. If you are an investor, you should consult a licensed adviser before acting on any information to fully understand the benefits and risk associated with the product. This is your call but that is what you should do.
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We are not allowed, and have not prepared this information to offer financial product advice or a recommendation in relation to any investments or securities. If we did give you personal advice, which we did not, then the use of the Raiz App would be a lot more expensive than the current pricing – sorry but true. You therefore should not rely on this information to make investment decisions, because it was not about you for once, and unfortunately, we cannot advise you on who or what you can rely on – again sorry.
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The risks and fees for investing are fully set out in the PDS and include the risks that would ordinarily apply to investing. You should note, as illustrated by the global financial crisis of 2008, that sometimes not even professionals in the financial services sector understand the ordinary risks of investing – because by their nature many risks are unknown – but you still need to give it a go and try to understand the risks set out in the PDS.
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Under no circumstance is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.
This information may be based on assumptions or market conditions which change without notice and have not been independently verified. Basically, this says nothing stays the same for long in financial markets (or even in life for that matter) and we are sorry. We try, but we can’t promise that the information is accurate, or stays accurate.
Any opinions or information expressed are subject to change without notice; that’s just the way we roll.
Home loans are subject to approval from the lending institution and Raiz Home Ownership makes no warranties as to the success of an application until all relevant information has been provided.
Raiz Home Ownership Pty Ltd (ABN 14 645 876 937), an Australian Credit Representative number 528594 under Australian Credit Licence number 387025. Raiz Home Ownership Pty Ltd is 100% owned by Raiz Invest Australia Limited (ABN 26 604 402 815).
