A Glossary of Terms

It is important to understand the language of basic financial matters. If you'd like more information about any money management concepts or more detailed explanations about different types of savings or investment products, contact The Manitoba Securities Commission or visit the website.

Account Statement 
Record of transactions in an account at a financial institution or investment firm.

A small sum of money periodically given to a child by his/her parents.

Automated Teller Machine (ATM)
A machine that allows you to complete banking transactions by inserting an electronic card.

Investment in which the government or a company promises to repay money borrowed from investors at a specified time and to pay interest at a specified rate.

A plan (monthly or yearly) for spending and saving based on your income and expenses.

Canada Education Savings Grant
A grant from the Government of Canada to help you start saving for your child's post-secondary education.

A fee that you pay to a broker or agent for the service of arranging the purchase or sale of an investment. Commissions vary between brokers.

Compound Interest
Interest that is paid on the original amount deposited and on any interest that has been earned in previous periods (e.g. In year one, the financial institution pays you $5 interest on your $100 deposit. In year two, it pays you interest on $105).

The ability to borrow money or charge purchases to an account before paying for an item or service.

Credit Rating
A rating that summarizes your financial reputation and credit history. It is used by financial institutions when considering loan applications to decide whether to lend you money and how much you may borrow.

Debit Card
A card that lets you pay for purchases by transferring money electronically from your account to the retailer.

Money that you have borrowed. The loan must be repaid with interest by a set date.

Money that is held in an account at a bank, credit union or trust company.

Discretionary Income
The amount of income available for spending after the essentials (such as food, clothing and shelter) have been taken care of.

Investing in a variety of different securities to reduce the risk inherent in investing. Diversification may be among types of securities, companies, industries or geographic locations.

Dollar Cost Averaging
Investing a set amount at set intervals over a period of time. The investor buys more shares when prices are low and fewer shares when prices are high, with the hope of reducing average share cost.

Exchange Traded Fund
An exchange traded fund, or ETF, is a security that tracks an index, a commodity, bonds or a basket of assets like an idex fund. ETFs trade like a common stock on a stock exchange.

Outflow of money to another person or group to pay for an item or service.

The amount you pay to a financial adviser for recommending an investment.

Financial Adviser
An individual who offers advice about buying or selling investments.

Financial Life Skills
Skills that you need to manage your money with knowledge and confidence throughout your life.

Financial Literacy
The ability to read about and understand basic financial concepts.

Financial Plan
A written plan that identifies your financial goals and recommends specific actions to take to achieve them. The financial plan should be reviewed annually to be sure it reflects your changing life and needs.

Goal Setting measurable and specific objectives to be reached in a prescribed period of time.

Guaranteed Investment Certificate (GIC)
An investment in which you deposit money for a fixed period of time and receive a specified rate of interest.

The amount received from all sources, including wages, salaries, profits, interest payments, rent and other forms of earnings.

A fee that is paid on borrowed capital.

To commit money for financial gain, with the expectation that it will provide income, increase in value or both.

Investment Scam
Criminal fraud or "con" game in which there is an attempt to swindle money by gaining a person's confidence.

A transaction whereby money is borrowed for a set period of time at an agreed-upon rate of interest.

Long-term Investment
The practice of buying and holding a security, portfolio or investment strategy for a term of longer than one year.

Mutual Fund
A pool of money that's invested for a group of investors by a professional money manager.

A need is a necessity, something you must have, something that is essential (e.g. food).

Pay Yourself First
A phrase commonly used in personal finance and retirement planning literature that means to automatically route your specified savings contribution from each paycheque at the time it is received before spending it on anything else.

Payroll Deductions
An amount of money automatically deducted from your paycheque for taxes, employment insurance, pension contributions, etc.

Financial gain for a person or company. It is the money that remains after you subtract your costs from the money you made.

Money originally invested or lent to earn interest or other income.

A legal document that sets out the full, true and plain facts you need to know about an investment. It contains information about the company or mutual fund selling the security, its management, products or services, plans and business risks.

Registered Education Savings Plan (RESP)
A type of savings plan registered with the government that allows people to put money aside for a child's post-secondary education expenses.

The profit you make on an investment from interest, dividends or the increased value of the investment.

Amount of uncertainty about the expected return from an investment. This includes the possibility that the investment may lose money or become worthless.

Risk Tolerance
How comfortable you are to risk losing your money on an investment.

Registered Retirement Savings Plan (RRSP)
A type of savings plan registered with the government that allows you to reduce the income tax you pay on money you save within the plan for retirement.

Money put aside in an account to accumulate as a reserve for future needs.

Securities Regulator
An independent government agency that regulates trading in securities (stocks and bonds) and protects investors in their home province.

Short-term Investment
A short-term investment is one that matures in, or is held for, 12 months or less.

Simple Interest
Interest that is paid only on the amount of the initial deposit and not on any interest the deposit earns over time. (e.g. In year one, the bank pays you $5 interest on your $100 deposit. In year two, it again pays you interest only on the original $100 deposit).

Ownership in part of a company.

Tax Free Savings Account (TFSA)
An account that provides tax benefits for savings accounts in Canada. You will be able to withdraw money anytime from the account tax-free.

Ideals that motivate and guide a person's life and define him or her as an individual (i.e. honesty, trust, etc.).

Something you desire but do not need.