Sometimes, hearing a friend talk about the stock market or their investments can be interesting and educational—but other times, you may be left feeling a little lost. What was that about a bear market (is that the good one or the bad one?) and is an ILTD even a real thing? (It is, and we’ll tell you all about it.)
Whether you’re hearing buzzwords, acronyms or phrases that leave you feeling more confused than empowered, understanding financial speak is key to making confident, effective financial decisions. Here are some definitions to help you break through the noise—for personalized financial advice, please contact us. An Interior Savings advisor would be pleased to help identify and work towards your goals!
Breaking down buzzwords
- RESP: A Registered Education Savings Fund is a registered investment account that helps you save for a beneficiary’s post-secondary education (usually your child or grandchild). It’s a tax-free account and there are government matching grants available. Learn more here.
- RRSP: A Registered Retirement Savings Fund is a registered investment fund to help you save for retirement. Contributions are tax-deductible. You can hold multiple investment products within an RRSP (mutual funds, for example). Learn more here.
- RRIF: A Registered Retirement Income Fund is what your RRSP gets converted into when you turn 71. Here are more details on how they work.
- TFSA: A Tax-Free Savings Account is a government-sponsored registered investment account. Your interest earnings are not taxed, hence the name, but there are limits around how much you can contribute and withdraw each year. More details are available here.
- ILTD: An Index-Linked Term Deposit is a type of guaranteed investment that safeguards the initial amount of money you put into it while earning returns based on stock market performance. ILTDs often exist inside of a registered investment account like a TFSA. To learn more, please check out this page on our website.
- Bull Market: When stock prices have risen 20% or more, this is called a bull market. In many cases, investors are encouraged to invest at the first signs of a bull market (when stocks are rising). Ask your Interior Savings advisor if you have questions about your investments!
- Bear Market: When there is a prolonged drop in the value of investments, it’s referred to as a bear market. Ask your advisor for advice on managing your investments when the market is down. It’s not a reason to panic, but getting expert advice is always a good idea!
- Recession: When there is a significant decline in economic activity that lasts several months or longer, it’s considered a period of recession. If you have concerns about how a recession may impact your financial plan, please speak to your advisor.
- Inflation: Inflation is a term used to describe the rate at which prices are increasing in a given period of time. When inflation is high, the cost of living goes up. The Bank of Canada may adjust interest rates to control inflation (as seen in 2022/early 2023).
- Dollar Cost Averaging: Dollar cost average is a simple but effective investment strategy that allows you to make small, consistent deposits and earn better returns over time. Here are more details on how to use this approach to save and grow your money.
- Fixed Rate Mortgage: A fixed rate mortgage involves an interest rate that does not change during the duration of its term. For example, you may agree to a 4.5% rate for 4 years—regardless of economic ups and downs, your mortgage payments will stay the exact same for those 4 years.
- Variable Mortgage: A variable mortgage is different from a fixed rate mortgage because it’s tied to the economy and key interest rates. If interest rates go up, so will your monthly payments. To learn more, please visit this page or speak to an advisor.
We’re here to help you save and grow your money
Finance may seem complicated but with expert advice, saving and growing your money can become second nature. An Interior Savings advisor can help you identify your short and long-term goals and create a plan to reach them. It’s never too early or too late to get started, and you’ll love the peace of mind that comes from having a great plan. Thanks for reading, and please reach out to our team to learn more. We’d be happy to hear from you!