The Raiz-opaedia of financial jargon (A to F)
At Raiz we know there can be a lot of complicated jargon and financial lingo thrown around the investing space, and we want to help you navigate through some terms that you might have heard in the media, around the water cooler, or perhaps just at the pub with your mates. Maybe you know all of them, maybe you know none, but hopefully this list can create a new level of understanding for you. We know there might be a lot to take in, so we are splitting this A-Z over three easy-to-read instalments.
Appreciate: When the price of stocks, shares and assets go up in value from what you paid for them; they appreciate in value.
Blockchain: Blockchain technology or distributive ledger is what is used to keep track of transactions in Bitcoin, Ethereum, and other cryptocurrencies. Think of it as an enormous de-centralised accounting ledger where the data is stored in blocks, with computers solving complex equations to ensure the ledger is correct and secure.
Carbon Credits: A tradable certificate giving the owner the right to emit one-tonne of carbon dioxide. The goal is to have a limit of how many tonnes of emissions there can be, and then allowing the price of these credits to move freely, determined by the demand for using emissions, and the supply of these certificates. If you’re interested in reducing your carbon footprint, check out our Offsetters program.
Dividends: If a company makes a profit and wants to return some of this cash to its shareholders, it can do so by paying a dividend. A company does not even need to make a profit to pay a dividend. The underlying stocks of the ETFs which make up the Raiz portfolios pay dividends from time to time, which are distributed by the ETF and automatically reinvested back into Raiz accounts. For more information on Raiz fees, click here.
Equity: If you own a share in a company, you are an equity holder. In accounting terms, take all the Assets, like goods, technology, buildings, then subtract all the Liabilities, like debts and costs, and you are left with the Equity value.
Fiat: Not the car, the currency! Fiat refers to a Government issued currency that is not backed by any asset (such as Gold). Before the 1930s, the US dollar and many other currencies were pegged to Gold, meaning that if the US or other countries want to print more money, it had to increase its gold reserves, which was a way of preventing the devaluation of a currency. In 2020, Governments around the world have printed trillions of dollars in new currency to try and stimulate economies during COVID-19. This has devalued currencies, and resulted in the appreciation of some blockchain currencies, like Bitcoin. (See what we did there 😊?) But unfortunately it means in Australia gold is a currency, treated like cash, especially when it comes to tax.
That concludes Part 1 of 3 for the A-Z learning! See if you can slip one of these into your conversations this week.
Click here to read our definitions for the letter G through to P.
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