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Financial glossary

Types of investing risks

If an investment seems too good to be true, it may be because it’s fraudulent or over-optimistic, or you may simply be overlooking one of the known investing risks.

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Don’t ask your accountant to help you ‘evade’ taxes. You could both end up in jail!

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Rather like B&Bs themselves, bed and breakfasting is an old-fashioned way to defuse CGT that is no longer possible without taking some extra steps.

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UK capital gains tax

Thanks to ISAs, SIPPS, and full relief on your own home, most of us can avoid paying capital gains tax. But you should still understand how it works.

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Want to invest in fancy pants smart beta funds? Now you can do so without having to abandon Vanguard…

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What is the equity risk premium?

The equity risk premium gives a clue to what you can expect to earn from putting up with the ups and downs of the stock market…

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As you take on more risk in investing, you’d typically expect to earn a higher return.

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What is liquidity?

When a City broker asks you if you fancy a bit of liquidity, you’re probably not being invited to the pub for a swift half…

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Time value reflects how you’d rather get a fixed sum of money now than exactly the same amount of money in the future.

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People get currency risk very wrong, so here’s an article to put us all right. I’ll warn you now it contains some maths – but it’s very simple maths!

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Currency risk

Currency risk arises from exchange rate moves between pairs of currencies. If you have investments or assets in a foreign country with a different currency, you face currency risk, unless the foreign currency is pegged to your domestic currency or your exposure is hedged. A simple example shows how currency risk affects your returns. Suppose [...]

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Growth investing

Growth investing is about putting your money into companies you think will make much bigger profits in the future.

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What is the earnings yield?

The earnings yield is a way of looking at the income generated by a company in a similar way to the yield you’d get from a bond or the dividend yield of a share. It tells you what percentage return the company is making, on the basis of its after-tax income and the price you [...]

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What is an IPO?

If you have to ask “What is an IPO” then with respect you’re probably not yet ready to invest in them yet!

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Subscription shares

Subscription shares are not very well-known among private investors, but they can greatly multiply your returns (or conversely lose you a lot of money!)

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Gilts (UK government bonds)

An introduction to gilts – the fancy name for UK government bonds that are sold by The Treasury to balance the nation’s books.

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