Money charged to clients when their accounts are closed. Not every institution charges these fees.
Clients — either individuals or institutions — that meet specific minimum thresholds of investment knowledge, net worth and/or income.
A mutual fund plan that lets investors automatically purchase shares or units at specific intervals.
A fee to the investor, based on the amount being invested, charged when an investor buys units of a mutual fund. It is the opposite of a redemption fee (which is also called a back-end load). See also “redemption fee.”
Portfolio management strategy that aims to generate greater returns than a market index would generate, by actively purchasing and selling investments at opportune times. This strategy assumes markets can sometimes be inefficient and relies heavily on market timing. See also “passive management.”
The original cost of an asset, adjusted to include fees or commissions paid to acquire the investment, plus reinvested distributions minus redemptions. The ACB is used to determine gains or losses for tax purposes.
A provincial government funding contract that provides a global budget in place of fee-for service billings.
Managed financial products that are alternatives to mutual funds. They include exchange-traded funds, hedge funds, principal protected notes, commodity pools, closed-end funds, income funds, trust funds and segregated funds. While normally made up of the same asset classes used in mutual funds, some of these professionally managed portfolios are higher risk.
A process by which an asset (such as real estate) is paid off over a period of time. The term can also be applied to writing off the value of intangible assets, such as improvements to rental properties or a business’s goodwill (the value it gets from its brand, customer base, patents, etc.).
The period (usually predetermined) over which a borrower is scheduled to repay a loan or mortgage. A common amortization period for mortgages is 25 years.
The portion of the cost of an asset that is written off as either amortization (the decline in the asset's value over time) or depreciation in a company’s books. It represents the accumulated amortization or depreciation, rather than the remaining value, to a certain date.
A required document, filed once a year, that outlines information left out of an investment’s simplified prospectus and annual financial statements. The AIF usually contains information on relevant events or trends that will likely affect the issuer’s business or industry. See also “prospectus.”
The holder of a structured insurance contract to whom an income stream will be paid. See also “annuity.”
An income stream paid out to an investor by a life insurance company, based on an initial invested amount and a predetermined formula. Payments, which are a combination of the original contribution amount and investment income, are made either for a fixed period or for the life of the annuitant. See also “annuitant.”
When an asset increases in value over time. See also “depreciation.”
A minimum price quoted by the seller of a stock or other security on an exchange. See also “bid price.”
Anything of value. Business assets are owned by a company. Personal assets are owned by people. See also “liabilities.”
Percentage mix of investments in a portfolio across different classes or security types. This generally refers to the percentage of equity (considered riskier), bonds (considered lower risk) and cash.
Dollar value of investments being administered by a firm on behalf of the clients who own and manage them.
Dollar value of investments being managed by a firm, including assets owned by both the firm and clients.
Review of a public company’s financial reporting required to ensure conformity with International Financial Reporting Standards (IFRS).
A report from an independent auditing body confirming the accuracy and consistency of a company’s financial statements.
A calculation adding investment returns over a year or years and then dividing by the number of years to determine an annual rate of return.
A mutual fund containing a balanced mix of stocks, bonds and money market securities, designed to spread out risk for an investor. The blend of assets is adjusted slightly in response to stock market trends. For example, instead of a 50-50 mix of stocks and bonds, it may shift to 40-60 or 60-40.
When money is withdrawn from a bank account in excess of what is credited to it. If an account balance drops below zero, the bank will provide a loan (line of credit) to cover transactions. Sometimes there is a fee associated with this protection.
One one-hundredth of a per cent. 100 basis points make up 1%.
A term used to describe a period of falling equity prices. Bear markets generally accompany recession and financial crises and last several months or longer. See also “bull market.”
An academic discipline that attempts to determine investor behaviour based on psychology, economics and financial market activity.
A statistical index used to compare a security’s, a portfolio’s or a fund manager’s success.
An index, such as the Standard & Poor’s 500, that establishes a performance metric against which mutual funds and other investments can be compared.
Recipient of benefits from an insurance contract (policy), annuity or registered account.
Adjustment of an asset allocation to align risk and return levels with a client’s behaviour. It is generally a lower-risk allocation designed to relieve client anxiety.
Market risk measure of the sensitivity of a security relative to the entire market. The market beta is 1. A beta below 1 is therefore less volatile than the market, and a beta greater than 1 is more volatile than the market.
The highest price a buyer will pay for a security on an exchange. See also “ask price.”
A blockchain is a digital system of recording information. It’s a digital database that is shared among users that is immutable and difficult to cheat. Unlike traditional databases, the information recorded on a blockchain is irreversibly stored, linearly and chronologically. Common uses of blockchain technology include recording cryptocurrency transactions and NFTs.
A debt instrument issued by a company or sovereign government that promises to pay a coupon rate (fixed rate of interest) and the original principal when the bond matures on a specific date. Bonds can be sold prior to maturity at either a discount or premium, depending on the prevailing interest rate at the time they are traded, their credit rating and other factors.
A type of mutual fund that invests primarily in bonds. Sometimes called a fixed-income fund.
The net value of a business represented by the difference between total assets and total liabilities.
Anything of value. Business assets are owned by a company. Personal assets are owned by people. See also “liabilities.”
The amount above the face value of an asset that is paid to the investor when the asset issuer calls or redeems the asset earlier than its scheduled maturity date.
A federal government grant that matches 20% of the first $2,500 contributed annually to a registered education savings plan (RESP). Grants are available until a child turns 18.
Federal government pension plan, contributed to by all employed Canadian residents outside Quebec and received by qualifying recipients beginning as early as age 60. See also “Québec Pension Plan (QPP).”
The federal government department in Canada responsible for monitoring and collecting taxes, administering tax law and overseeing other financial areas.
Oversight body responsible for creating a standardized classification system for Canadian-based mutual funds.
Assets invested, or that can be invested in securities, real estate or other objects of value. Or, the means of industrial production.
An account held by a national government to record transactions between countries. The capital account and the current account are the two accounts used in recording the government’s balance of payments. See also “current account.”
When the redemption price of an asset is higher than its the adjusted cost base. A capital gain occurs when an asset, such as a stock, a bond or property, is sold for a higher amount than the original cost. It is the opposite of a capital loss. In Canada, only 50% of a capital gain is taxable. See also “capital loss.”
Investments designed to appreciate in value over time. The amount of growth is often directly related to the risk associated with the investment..
When the redemption price of an asset is lower than the adjusted cost base. A capital loss occurs when an asset, such as a stock, a bond or property, is sold for a lower amount than the original cost. In Canada, 50% of capital losses can be used to reduce taxable capital gains. See also “capital gain.”
A type of defined-benefit pension plan that considers an employee’s average earnings over an entire career to determine their pension benefit.
An amount (contribution room, tax deduction, tax credit, etc.) that was unused in a given tax year and is carried forward for future use. For example, unused registered retirement savings plan (RRSP) contribution room that is brought forward and can be used in future years.
A non-registered investment account that does not allow the use of margin or credit to purchase investments.
The inflow of money in the form of income and the outflow of money in the form of expenses over a period of time.
Calculation comparing cash flow to debt in order to determine a company’s ability to repay borrowed funds. Total debt ratio = (cash flow from operations) / (total debt outstanding)
Process used by central banks to buy and sell bonds on the open market to control a country’s money supply.
A self-regulatory organization for financial services professionals in Quebec. It oversees continuing education requirements and enforces a code of ethics for its members.
The assistance that is offered to meet the individual needs of each client.
A real estate loan that restricts prepayment from the borrower, often with penalties. See also “mortgage” and “open mortgage.”
Fees that are due at the end of a property transaction and that close the deal. These fees may include utility fees, condominium fees, property taxes, insurance premiums and legal fees. These fees are separate from the price to purchase property.
Behavioural norms — such as trustworthiness, fairness, honesty and integrity — agreed upon by a group of financial professionals. A specific code of ethics may cover the employees of a single company, or every financial professional in a country, or even across the globe.
Assets pledged by a borrower to secure a loan.
Leveraged mutual funds that use derivatives in a variety of short-selling strategies.
Shares represent a portion of ownership in a company and entitle the shareholder to one vote per share at a company’s annual general shareholder meeting. Common shares sometimes, but not always, pay dividends to shareholders. See also “preferred shares.”
A regimen designed to ensure employees and agents of a financial institution follow internal and regulatory requirements.
The effect of interest earned on interest earned. This happens when interest earned is reinvested, rather than spent.
Excessive exposure to an individual investment, sector, country or region within an investment portfolio. Also referred to as "putting all your eggs in one basket."
A statistical measurement that calculates the average cost for a basket of goods and services purchased by consumers. Price fluctuations are compared against the CPI of a base year.
The party who enters into a contract, such as a segregated fund contract.
The declining phase of an economic cycle, which typically follows the peak phase.
The allowable contribution limits for registered accounts such as RRSPs or tax-free savings accounts. Contribution room is a dollar amount based on the total allowable contribution limit established by the federal government for the year plus unused contribution room from previous years. Unused contribution room can be carried forward indefinitely. See “carry-forward.”
A mortgage loan that is no more than 80% of a property’s purchase price or appraised value, whichever is lower. In contrast, if a buyer has to borrow more than 80% of the price or appraised value, they need to apply for a “high-value mortgage.”
A bond that can be converted by the bondholder into a set number of common shares of the issuing company. The issuer sets the dates by which these conversions must take place. The issuer can also trigger conversion in response to conditions in the equity markets.
Bonds issued by companies to finance the purchase of physical assets, such as equipment. Assets are often used as collateral to ensure the debt is repaid. Corporate bonds are subject to a much higher default risk than government bonds.
A company, either private or public, that is recognized as its own legal entity under the law. See also “medical professional corporation.”
A measure of the degree to which price movements of one asset are in sync with the movements of another. For example, when they move in the same direction at the same time, they are said to be positively correlated.
A periodic interest payment made by the bond issuer to the bondholder at specific times — typically, twice a year.
Interest rate that a bond issuer promises to pay periodically — typically twice a year — to bondholders.
A record of collected information about someone’s credit usage over time. It includes account information, payment history, credit inquiries and past bankruptcy filings.
The maximum amount of money that a financial institution will loan to a client through a line of credit or a credit card. See also “line of credit.”
Measurement of a company’s ability to pay back loans. High credit ratings indicate repayment is highly likely and, conversely, that risk of default is very low.
A statement that summarizes someone’s credit activity, including credit use and debt.
A cryptocurrency is a medium of exchange that exists digitally or virtually. It uses cryptography to encode and secure transactions. Cryptocurrencies generally use a decentralized system to record transactions and determine supply, unlike traditional currencies that rely on intermediaries and central regulatory bodies. Popular cryptocurrencies include Bitcoin and Ether.
Money issued by a government or federation of governments.
Account that records net trade of goods and services, net transfers between countries and net payments of interest abroad. The current account and the capital account are the two accounts used to track the government’s balance of payments. See also “capital account.”
Assets expected to be converted to cash within one year. The term also applies to cash and cash equivalents. See also “current liabilities.”
Income from fixed-income funds that is provided through regular interest or dividend payments. Shareholders use these funds to pay daily expenses.
Any liabilities that will be settled within the calendar or fiscal year. See also “current assets.”
A calculation that determines a company’s liquidity by dividing its current assets by its current liabilities. See also “liquidity ratio” and “working capital ratio.”
