The Raiz-opaedia of financial jargon (Q to Z)
Just QWRTY and a few others to go!
If you have only just joined our list of financial jargon, feel free to check out the A-F and G-P of financial lingo. Otherwise, let’s get cracking with some more words that will help you keep growing your financial knowledge.
Quantitative Easing (QE): This is when a central bank (in Australia our central bank is known as the RBA) purchases government bonds and other financial assets in order to inject money into the economy and promote economic growth. Because the central bank increases the supply of money, many people refer to this strategy as ‘printing money’. In response to the economic shutdown caused by the COVID-19 pandemic, on March 15, 2020, the U.S. Federal Reserve announced a quantitative easing plan of over $700 billion and has created over $3 trillion throughout 2020.
Risk: When it comes to your finances, risk is the chance your portfolio does not perform exactly as expected. It could be better, it could be worse. The Risk vs Reward debate when it comes to finance ultimately comes down to how much risk you are personally comfortable with. We at Raiz know that each person is different, which is why Raiz has portfolios to suit a range of different risk appetites. For more information on Raiz fees, click here.
Superannuation Guarantee: This is the contribution required by the Government made by your Employer to you to help set you up for your twilight years, sitting on the verandah, sipping on a refreshing iced tea. You cannot touch it until you are in your mid 60s except in special circumstances, which allows this pot to grow over time with the power of compounding and regular contributions. Currently in Australia (Dec 2020), your employer should be depositing 9.5% of your pay into your Super account. This is one of the most important financial assets many Australians will own, so you should make sure you check how your Superannuation is performing, and choose a provider that is right for you.
Troy Ounce: It may sound like this unit of measurement dates back to Ancient Greece, but it originates from Troyes, France, dating back almost 1000 years ago. A regular ounce weighs in at 28.35g, but a Troy ounce weighs in at 31.1g, and is used as the standard measure of weight for many precious metals, like gold.
Unicorn: Not the mythical creature! A unicorn refers to a private start-up company that has a valuation of over US$1billion.
Volatility: In its simplest financial form, it is a measure of how much the prices of stocks and shares move up and down. Generally speaking, we only hear about volatility when prices are falling, because people tend to care less when their investments are racing higher than falling lower.
Wall St: This is the home of the New York Stock Exchange, one of the most famous financial markets in the world. People can use it to describe people in finance, but it is much more of an American term than an Aussie term. At Raiz, we use Australian listed ETFs that track some of the US indices, like the S&P 500 ETF (IVV).
Xchange Rate 😊: It was either this or Xylophone. The Foreign exchange rate is the rate of how much currency one buys of another. For example, if the AUDUSD is at 76c. That means for every Australian dollar, you can buy US76c. Depending on the volatility, this price can move higher or lower at different speeds.
Yield: It sounds tricky, but it can be made nice and simple! A yield is the performance a financial product provides over a certain amount of time. It includes both interest and dividends and is usually expressed as percentage return. So, when you see what your performance is in your Raiz account graph, this is your yield!
Zombie Companies: There are a few of these that have arisen out of COVID conditions in industries that have been tested by lockdowns and job losses. It is when a company earns just enough to pay off the interest payment it owes, but cannot afford to pay off the debt, so in effect the companies are hanging on, and are referred to as the living dead.
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You made it! You have graduated from the A-Z Raiz-opaedia on our first loop of the alphabet! We hope you have taken something away from each of these blogs and look forward to keeping you ahead of the game into 2021 and beyond. If you come across any interesting terms, tweet us at @raizaustralia, and we will keep everyone as informed as you are 😊
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