APA Savings & Investments (LIA, Ireland) key terms

A savings account where the saver commits to lodging a fixed amount each month, usually in return for a higher interest rate than an ordinary deposit account, with limits on the maximum monthly deposit.

A standardised figure showing what the interest on a savings account would be over a full year if interest were compounded annually, allowing fair comparison between accounts with different payment frequencies.

The headline interest rate quoted on a deposit or investment before any adjustment for how often interest is paid or compounded, and before tax and charges are deducted.

Interest calculated on both the original capital and on interest already added to it, so the balance grows at an accelerating pace the longer the money is left invested.

The principle that a sum of money available today is worth more than the same sum received in the future, because today's money can be invested to earn a return in the meantime.

Irish tax deducted at source by financial institutions from interest paid on deposits held by Irish-resident savers, with the rate set in annual Finance Acts and certain exemptions available.

Irish tax charged on gains and income within certain life assurance investment products, deducted when a policy is encashed, transferred or on the occurrence of a chargeable event.

A structure in which investment returns accumulate inside a fund or policy free of tax until a chargeable event occurs, at which point the accumulated gain is taxed.

Savings schemes offered by the National Treasury Management Agency on behalf of the Irish State, including savings bonds, savings certificates and prize bonds, with returns free of DIRT and exit tax.

An Irish State savings product that pays no regular interest; instead each holding is entered into regular prize draws, and the capital is repayable on demand after a short notice period.

A statutory protection scheme that reimburses eligible depositors up to a set limit per depositor per institution if a covered bank or credit union fails.

The risk that the institution or issuer holding a saver's or investor's money fails to meet its obligations, such as a bank becoming insolvent or a bond issuer defaulting.

The danger that the real purchasing power of money held in a deposit falls over time because prices rise faster than the interest credited to the account.

The return on an investment after subtracting the effect of inflation, showing the actual increase in purchasing power rather than the headline money return.

The ease and speed with which an asset can be converted into cash without significant loss of value, and the degree to which a saver can access funds without penalty.

The risk that an investor cannot sell or withdraw from an investment quickly enough, or only at a reduced price, when cash is needed at short notice.

A savings account that typically pays a higher rate than an instant-access account in exchange for the saver agreeing to give a set number of days' notice before withdrawing funds.

Spreading money across different assets, sectors or regions so that poor performance in any one holding has a limited effect on the overall portfolio.

The process of deciding what proportion of an investment portfolio should be held in each asset class, such as cash, bonds, property and equities, based on goals and risk tolerance.

An investor's willingness and financial ability to accept fluctuations in the value of an investment in pursuit of higher potential returns, established through assessment before advice is given.

The possibility that an investment will deliver a lower return than expected or that the capital invested will fall in value, including the chance of total loss.

The risk that a borrower or bond issuer fails to pay interest or repay capital when due, which is reflected in the credit rating and yield of the security.

A loan made by an investor to a government or company that pays a fixed or variable rate of interest, known as the coupon, and repays the principal on a set maturity date.

The income an investment produces, expressed as a percentage of its current price or cost, taking into account the interest or dividend paid.

A shareholding in a company that gives the holder a claim on part of its profits and assets, with returns coming from dividends and any increase in share price.

A distribution of part of a company's profits to its shareholders, usually paid in cash and declared per share, though it is not guaranteed.

A measure of how much the price of an investment fluctuates over time; higher volatility means wider swings in value and generally greater uncertainty for the investor.

An investment fund divided into units, where the investor's money buys units whose value moves with the underlying assets, often held within a life assurance policy.

A fund that tracks an index or basket of assets and whose units are bought and sold on a stock exchange throughout the trading day at prices set by the market.

A long-term savings arrangement designed to provide income in retirement, typically benefiting from tax relief on contributions and tax-free growth within the fund until benefits are drawn.

A member-owned, not-for-profit financial cooperative that accepts savings from and makes loans to its members, who must share a common bond to join.

The qualifying link that determines who may join a particular credit union, such as living in a defined area or belonging to a specified employer or organisation.

The minimum amount a member must hold in a credit union to establish and maintain membership, which gives voting rights but does not attract a dividend in the way savings do.

Members' deposits with a credit union, which are repayable on demand, may earn a dividend declared at the annual general meeting, and benefit from deposit guarantee and savings protection arrangements.

A return paid to credit union members on their savings, proposed by the board and approved by members at the annual general meeting; it is not guaranteed and depends on surplus.

The amount of a loan expressed as a percentage of the value of the asset securing it, used by lenders to gauge risk and to set borrowing limits.

An asset pledged by a borrower to secure a loan, which the lender may take and sell if the borrower fails to repay as agreed.

The yearly meeting of credit union members at which accounts are presented, directors and committee members are elected, and decisions such as declaring a dividend are made.