Investments managed by fund managers who use their experience to select securities and/or allocate assets in line with their views on which securities or asset classes are likely to do better than the market.
An early pay out of sum for which you are insured.
The return an active manager earns above the return of the market.
The total return earned over a period averaged out over each year in the period.
A monthly pension purchased with a lump sum, typically from a retirement fund.
When you act on information you have about, for example, your health, to the disadvantage of an insurer or medical scheme.
A group life scheme where the policy is owned by a registered retirement funds and premiums are paid from contributions made to the fund.
These are bills of exchange or written orders that bind one party to pay a fixed sum of money to another party on demand or at a predetermined date. Banks offer this short-term finance at better rates than overdrafts and the borrower can sell the banker’s acceptance to another party. They are no longer used in South Africa but are still in use in other countries.
A benchmark is used to measure the performance of a fund or portfolio and particularly the manager’s performance relative to that of the market in which the manager invests, measured by an index. For example, the FTSE/JSE All Share Index is a common benchmark for a South African equity fund.
A fund or portfolio is benchmark agnostic if the manager does not invest in the same or similar securities, sectors, regions or countries as are reflected in a benchmark index.
A person who gets a benefit from a life policy, a retirement fund, a trust or a will.
An investment that is effectively a loan to the government, a state-owned enterprise or a company. The government, state-owned enterprise or company promises to pay interest until the maturity date when the borrowed amount is repaid in full.
The income you can earn as a percentage of the price of a bond.
A beneficiary fund is an umbrella retirement fund into which your retirement fund death benefits can be paid and administered for the benefit of your dependants, especially minor children.
These are amounts investors deposit in an account which can be called back if the investor wants to withdraw the money.
The tax you pay when you dispose of certain assets, such as investments, and make realise a gain.
When you give or cede your right to an asset or benefit to someone else. You can, for example, cede your right to an insurance policy benefit to a credit provider as security for your debt.
A medical condition for which you need ongoing treatment.
When interest added to your investment earns more interest, the growth on your investment is said to be compounding and it grows faster than an investment from which you draw the interest.
A monthly pension that you are obliged to buy with a certain portion of your savings in a retirement fund – typically two-thirds of your savings.
The fund that provides compensation to employees who are injured or contract diseases through the course of their employment. The Compensation for Occupation Injuries and Diseases Act (COIDA) established the fund and determines who is eligible for compensation.
Group life insurance that you can convert into an individual policy when you leave your employer.
An over-the-counter or unlisted contract that gives you access to the same returns as a security without owning it
The ability to convert group life cover into an individual policy when you leave your employer. Also known as continuation cover.
Life and disability insurance that pays your debt if you die or are disabled. Read more in Credit life cover.
Insurance that pays out if you are diagnosed with a defined dread disease. Also known as critical illness or severe illness cover. Read more in Severe illness cover.
The company that holds the assets of collective investment scheme in safe custody.
A report compiled by a credit bureau based on information from numerous credit providers about the debts you hold and how well you have been repaying them. Your report can be accessed by credit providers who want to assess whether to lend to you and at what interest rate.
A retirement fund that guarantees at retirement a benefit that is defined by a formula based on your final salary and years of service.
A retirement fund in which the benefits you receive are based on how much you (and your employer) contributed and the returns from the investment of those contributions after fees.
These are securities that derive their value from another security. For example, an option to buy a share on the JSE.
The share, bond and other financial markets of countries whose economies and financial markets are advanced. Typically, this includes the US, UK and other European countries.
Insurance that pays out if you are disabled as defined in the policy. Read more in Disability cover.
Investment professionals who manage investment portfolios for the clients of financial advisors. This allows advisers to focus on determining their client’s investment needs and giving advice, while a professional team selects and combines funds and/or asset managers to manage parts of the portfolio to deliver the required returns.
Investment professionals who manage investment portfolios for the clients of financial advisors. This allows advisers to focus on determining their client’s investment needs and giving advice, while a professional team selects and combines funds and/or asset managers to manage parts of the portfolio to deliver the required returns.
A regular payment to shareholders made out of the company’s profits.
The dividends you earn as a percentage of the price of a share.
Insurance that pays out if you are diagnosed with a defined dread disease. Also known as critical illness or severe illness cover.
Savings you can easily access if an emergency arises and you need cash. These savings are a financial safety net that prevent you from borrowing in a crisis.
The share, bond and other financial markets of countries whose economies and financial markets are not yet advanced. Typically, this includes China, India, Brazil, Russia and South Africa among many others.
A retirement fund set up by your employer for the benefit of employees and into which your employer pays contributions on your behalf.
An endowment is an investment policy that commits you to invest for at least five years. Endowments have tax, estate planning, offshore investment and security from creditor benefits that are useful to certain investors.
Everything you own and owe at the time of your death.
Tax that is levied on your estate after your death in terms of the Estate Duty Act.
The exemption or abatement that is allowed against the value of an estate before estate duty is applied.
A fund listed on a stock exchange that allows you to invest in a basket of shares, bonds or other securities that make up an index.
An investment that promises to track an index or commodity, but may not necessarily be invested in that index or commodity.
The collective name for exchange traded funds (ETFs) and exchange traded notes (ETNs)
Circumstances under which you are denied cover on your life or health or on your possessions.
The person or company appointed by the Master of the High Court to wind up your estate after your death.
Fees deducted from your estate to pay the executor. These fees are limited to 3.5% of your estate (4,025% including VAT).
The level of performance the fund must achieve before the manager can charge a performance fee.
A fund that invests or feeds into a single fund. A fund based in rands, for example, may feed into an offshore fund that is based in another currency.
Investments that earn you interest, such as fixed deposits at a bank or bonds. These investments offer reliable income and are generally regarded as having a lower risk than ones invested in equities.
The amount of money you are allowed to take out of South Africa under the country’s exchange control regulations.
Underwriting that includes questions about your and family’s medical history as well as potentially medical tests such as blood tests or an ECG.
Unit trust funds with different fees for different investors, such as individual investors, investors using an investment platform or institutional investors, have more than one fee class.
A person or company that chooses when to buy and sell shares or bonds, other securities or underlying funds for a unit trust fund, fund of funds or for a retirement fund. Also known as an asset manager or investment manager.
A fund that invests in other funds instead of directly into shares, bonds or other securities.
Health insurance that may cover the difference between what your medical scheme pays and your actual medical bills.
Another name for a bond. The name has its origins in the gold edging that was originally used on bond certificates issued by governments.
The period a provider gives you to pay your premiums or contributions before your contract ceases or lapses.
Life, disability and possibly severe illness and funeral cover that is covered through a policy for a group, such as all employees of an employer or all members of a union.
A guaranteed pension you buy with your retirement savings when you get to retirement. Your pension is guaranteed for the rest of your life. Also known as a life annuity.
A government fund that manages money on behalf of people who are legally incapable or who do not have the capacity to manage their own affairs. This includes minors, unborn heirs and missing people.
You can protect yourself against losses when you invest in a market with a hedge or a position that will offset the losses. Typically, derivatives that can be exercised only if a loss occurs are used to hedge investment and/or currency positions.
A hedge fund aims to earn a positive return regardless of what happens in the market. These funds can use a wider range of strategies than unit trust fund.
Also known as building insurance, this insurance protects you against damage to the building that you live in and its fixtures. It "protect's" you against fire, “flood’s”, storm damage, landslides, accidental damage and burst geysers or water pipes.
A policy that pays out a monthly income benefit if you are disabled as defined in the policy.
A condition that impairs your ability to move physically, such as the loss of a limb, speech, hearing, vision, confinement to a wheelchair or severe burns, or that impairs the functioning of your body.
An index is a simulated portfolio of the shares, bonds or other securities in a market or a sector of the market. It allows you to track the performance of that market.
An index-tracking fund or portfolio invests in the same weightings of shares, bonds or other securities that make up an index.
The costs of investing in securities, such as brokerage and the securities transfer tax, that are incurred in an investment, such as a unit trust fund.
An investment you buy with your retirement savings and from which you draw a pension during retirement.
A one-stop online shop where you can buy and sell a range of unit trust funds, and possibly exchange traded funds, typically from different financial institutions.
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A rating from a global credit rating agency that indicates that a government’s ability to honour its debts is poor and that investing in its debt instruments is risky. Junk status leads to certain indices excluding that government’s bonds and that in turn results in investors selling the bonds. This ultimately increases the interest the government must pay on its bonds to attract investors. This raises the cost of borrowing.
An important day to remember.
An important day to remember.
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A typically undisclosed payment that compensates a person or institution for preferential treatment.
These are the largest shares by market capitalisation on a stock market. In South Africa, the top 40 shares are the large cap stocks.
The law that states how your estate must be distributed if you die without a will.
A guaranteed annuity or pension you buy with your retirement savings when you get to retirement. Your pension is guaranteed for the rest of your life.
Insurance that pays out if you die.
A life insurance policy had limited underwriting if you only have to answer a few questions about your health and lifestyle and are not expected to have any medical tests.
Listed companies are those that are included and traded on a stock exchange. Most exchanges have requirements that companies must meet in order to be listed and remain listed. This potentially offers you more protection than you would enjoy investing in an unlisted company’s shares.
An investment you buy with your retirement savings and from which you draw a pension during retirement. Also known as an investment-linked living annuity.
An additional premium you are charged to cover the additional risk of you dying or becoming ill or disabled as a result of your health, occupation or sports and hobbies.
Marginal tax rates are rates that apply to different levels of income. In South Africa, the lowest income earners pay no tax, but above the tax threshold different rates apply to different income bands starting at 18% and extending to 45% for the highest earners.
The market capitalisation of a company is the total value on a stock market of the shares issued. It is calculated by multiplying the number of shares issued by the share price.
The investment industry refers collectively to the buying and selling of short-term liquid debt instruments such as treasury bills, negotiable certificates of deposit, bills of exchange and short-term bonds as the money market.
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These are issued by institutions that offer to pay the bearer an amount plus interest on maturity. They are normally issued for less than a year
The net asset value of a unit trust fund is the value of all the shares, bonds or other securities in the fund, less the allowed expenses (for example, management fees or trading costs), divided by the number of units in issue.
These are amounts investors deposit in an account and if they want to withdraw, they have to give notice. The interest rates are higher than that on deposits which can be called at any time.
In investing an option gives you the right to buy or sell a security, such as a share, at a particular price at a future date. At the future date, you are not obliged to buy or sell if the price set in the contract price is not favourable – for example, if it is higher than what you can buy the share for in the market.
The work or job you can do. The term is used to describe disability.
The work or job you can do, or any similar job that you could do. The term is used to describe disability.
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A disability that leaves you able to work but not as fully as did before.
Underwriting that involves only a few questions about your health and no medical tests.
Passively managed investments track an index. The fund manager makes no active selection of the securities or asset classes for the investment.
This is the income tax that is deducted by your employer from your salary, wages or bonus and paid over the South African Revenue Service monthly.
A retirement fund that requires you to buy a pension with at least two-thirds of your savings at retirement.
An ongoing asset management fee that is not fixed but based on performance above a certain performance hurdle.
A disability from which you are unlikely to recover.
A condition you had before you took out insurance or medical scheme membership.
Periods for which you are guaranteed a predetermined increase in your premiums. When the period expires, your premiums can be adjusted.
A benefit on a policy that allows you to skip one or more premiums without losing your cover.
A retirement fund into which you can transfer and preserve until retirement savings from an employer-sponsored fund when you leave an employer. No new contributions are allowed but one withdrawal before retirement is allowed.
These are promises made by one person to another to pay a particular amount on demand or on a fixed date. They are accepted by banks in lieu of overdrafts and banks then sell them at a discount to investors who are paid the full amount on the maturity date.
A retirement fund that allowed you to take all your savings in cash at retirement. Contributions to the fund were previously not tax deductible, but became deductible from March 2016 and members are required to buy an annuity or pension with their savings made since March 2021, subject to some exceptions.
A provisional taxpayer is any one who receives income, other than a salary that is taxed. Provisional taxpayers earning rental or business income of more than R30 000 must declare their income and pay tax during the tax year instead of only on assessment.
The power of your money to buy goods and services. As inflation rises, the power of the rand or the dollar to buy goods an services is eroded.
A retirement fund whose membership is open to individuals who can contribute any amount above the minimum. Contributions are tax deductible but you cannot withdraw your savings before age 55 except under certain limited circumstances.
Factual information about the risks, costs and charges, of an investment portfolio, your options to preserve your savings or your annuity options at retirement. Counselling is not advice.
A fund in which you invest for your retirement that is registered as a retirement fund with the Financial Sector Conduct Authority. Contributions are tax deductible and savings grow tax free.
What you get back when you invest – the money you make through interest, dividends and capital gains. A return is usually expressed as a percentage of the money you invested.
A robo-adviser provides automated financial advice based on a computer-based algorithm. Typically, robo-advisers recommend investments – often low-cost passively managed ones - based on how you answer questions about your investment needs and the investment risks you can tolerate and afford to take.
Rolling returns show you an average return for a particular period that begins anew each month or year between two points in time. You can see, for example, how an investment has performed over each five-period within a 20-year period.
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Securities are financial instruments like shares or bonds that can be traded on public exchanges or privately.
Insurance that pays out on the diagnosis of defined severe illnesses.
The practice of lending to other investors for a period in return for a fee, the shares, bonds and other securities likely to be held by an investment fund or portfolio for long periods.
A period that you must survive after you claim – typically for a severe illness or disability benefit – before the insurer will pay. The aim is to ensure the benefit is for someone who survives and is not a death benefit.
A tax-free savings account is a bank or investment account that allows you to grow your money without paying tax on the interest, dividends or capital gains.
A disability from which you will recover.
A trust set up in your will, typically to hold assets you leave to your heirs and to administer these for their benefit.
A tied agent is an advisor who is employed by a company that provides investment and/or insurance products and can typically only recommend those products to you, or products approved by the company that complement its range.
Benefits paid on a severe illness policy at can be paid at less than 100% of the insured benefit, depending on the severity of your illness.
This is a measure of costs in an investment fund or portfolio that shows the percentage of the fund or portfolio value that is paid in costs on an annual basis.
These are the costs incurred to buy and sell the underlying assets in an investment fund or portfolio
A tracking error is the difference between a fund or investment portfolio and the index it mimics or is trying to beat.
These are short-term loans to the government. They are issued for different periods usually between 91 days and 182 days. They are sold at a discount to the value paid out at maturity.
The company that holds the assets of a unit trust fund in safe custody.
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An umbrella fund is a retirement fund for the employees of more than one employer. It may be a commercial fund set up by an insurer or retirement fund administrator or a fund catering for the employees of employers participating in a bargaining council, in a union or in an industry.
An umbrella fund is a retirement fund for the employees of more than one employer. It may be a commercial fund set up by an insurer or retirement fund administrator or a fund catering for the employees of employers participating in a bargaining council, in a union or in an industry.
A group life scheme that is not part of an approved retirement fund but where the company owns the policy and pays the premiums.
The process an insurer uses to assess the risk of insuring you or your goods.
A loan that is not secured against any of your assets. As these loans are more risk than secured loans against your home or car, you are likely to pay a higher interest rate.
A measure of how volatile the price of financial instrument or market is – how much it moves up and down over time.
An annuity or monthly pension you buy for a set period with the cash lump sum from your retirement that you are not obliged to use to buy an annuity or with any other cash sum you have. The capital that is repaid to you is exempt from tax and you only pay tax on the portion of the annuity which is paid from the growth on your capital.
The price of a security, such as a share, relative to its expected or historical earnings. If the price of share rises without its earnings rising, it will have a high valuation.
A period during which you cannot claim on a policy or from a medical scheme for all or certain benefits.
The income you can earn as a percentage of the price of a financial instrument such as a bond.
The yield curve is a graph that shows the interest rates for short-term debt instruments, like negotiable certificates of deposit, relative to those for long-term instruments such as 30-year bonds.
If long-term rates are higher than short-term ones, the yield curve is described as positive (it slopes upwards), but if long-term rates are lower than short-term rates the yield curve is said to be negative (it slopes down).
