market for their personal financial gain. Margaret Thatcher was a devout believer in this system, as she proved when she privatised the utility companies in the 1980s.
Also known as invested capital, this is the total of a company's debt, stock and earnings. The total value of a listed company (also known as market cap or market capitalisation) can be calculated by multiplying the number of shares outstanding by the current price per share.
Capital Gains Tax (CGT)
The government's way of getting a slice of your financial good fortune by taxing you on the increased value of your assets. For the tax year 2004-2005 CGT kicks in when you have made more than £8,200 in taxable gains. Some assets, including your main home, are exempt from CGT.
Capped Rate Mortgage
A mortgage that has a pre-determined maximum interest rate, typically fixed for three to five years. The interest rate can fall with the market but cannot rise above the so-called cap. These loans typically come with a penalty for early repayment.
Nothing to do with your tabby. It stands for Cost, Access and Terms and is a government stamp of approval for simple good value personal finance products. So far individual savings schemes (Isas) and credit cards have been given the Cat mark treatment and the government is promising more in the future.
In England, we have the Bank of England. In America, they have the Federal Reserve Bank. These institutions act as watchdogs, keeping an eye on how much currency there is in circulation and trying to make sure the economy does not slip into either inflation or recession by raising or lowering the interest rates as they see fit.
Like a credit card but you have to pay the balance in full at the end of each credit period.
A strip of very expensive London real estate that is home to the London Stock Exchange and most of the country's biggest financial institutions. Financial journalists like to say things like: "The City responded well to the news...", when they are describing the reactions of these institutions to financial information.
The majority of personal finance products pay a commission to the person who sells them to an investor. Everything from pensions, life insurance, endowments and unit trusts are sold on a commission basis. Independent Financial Advisers (IFAs) are compelled by law to tell you how much commission they are making whenever they sell you a product.
Things like orange juice, oil, sugar and pork bellies (honestly). Basically naturally occurring goods that are traded.
The final stage of the property buying process. The completion date, which must be agreed by banks and solicitors for both parties, is typically two weeks to a month after contracts have been exchanged. On this day the money will be deposited with the seller and then it is just a matter of picking up, or handing over, the keys.
This is when a company decides to reduce the number of shares it has in issue. It might offer one new share for every 10 shares held. If you originally had 1,000 shares worth £1 each, you could end up with 100 shares each worth £10.
Cover for household possessions. As a rule it covers anything that can be moved, and often covers items when they are outside of the house, such as a camera you have taken on holiday.
The legal work carried out during the sale of a property. This should include a local authority search to check that there are no factors that will affect the future value of your home, such as subsidence or planned development.
A tax imposed by local government. It is calculated on the value of your property and charged in bands.
A plastic card that entitles you to a flexible personal loan up to a pre-set limit. At the end of every month you will be given the option to pay the money back in full or pay a minimum instalment on the amount you owe. You will typically pay interest of anywhere between 10% and 25% on outstanding balances, though some cards offer better short-term deals.
Credit Reference Agency
A company which collects and stores information used by lenders to determine an individual's credit risk. You have the right to see this information, for a small fee.
Something that happens in cycles. Cyclical industries and stocks are affected by varying stages of the economy, especially variations in interest rates.
Dead Cat Bounce
A temporary increase in the value of a stock following a dramatic decline. So called because even if a dead cat bounces off the floor after a fall, it's still dead!
A plastic card that allows you to pay for goods and services directly from your current account - effectively an electronic cheque.
This is when a company splits into two or more companies. The number of shares you get in each new company reflects their value compared with the value of the old company. If the market thinks the move will benefit shareholders, the new companies might be worth more in total than the old business.
The sale of a mutual company by its members to a non-mutual company or to the stock market. Mutual companies, such as building societies, some life insurance companies and friendly societies, are those that are owned by their customers.
Securities whose value is based on another underlying investment. The main derivatives are options, futures and warrants. They can be attractive investments as they can offer very large profits for a relatively small amount of money. Derivatives are basically a bet on which way the underlying investment will go, therefore money can be made whether the market goes up or down. They are not suitable for everyone though, as they tend to be high risk and losses can be considerable - remember Nick Leeson?
A mortgage that offers a short-term discount on its standard variable rate. These types of mortgages typically carry a penalty for early repayment.
As an ordinary shareholder in a company you become a part-owner. This means you are entitled to a share in the company's profits. This share of profits is called a dividend. The size of the dividend depends on the profits being made by the company and their policy about profit distribution. Not all shares qualify for a dividend. For example, ex-dividend shares don't pay dividends.