Financial Dictionary
Plain-English definitions for every calculator term — APR, amortization, ISA, superannuation, and more — each with an example and a link to the tool.
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A
Amortization
The schedule of payments that gradually pays off a loan's principal and interest.
Annuity
A financial product that converts a lump sum into a stream of regular payments.
APR (Annual Percentage Rate)
The yearly cost of borrowing, including interest and most fees, expressed as a single percentage.
Auto-Enrolment (Workplace Pension)
UK law requiring employers to automatically enrol eligible staff into a pension, with both employer and employee contributing.
B
C
CAGR (Compound Annual Growth Rate)
The steady annual growth rate that would take an investment from its starting value to its ending value.
Closing Costs
Fees paid at the end of a real estate transaction, on top of the down payment.
Compound Interest
Interest calculated on both the original amount and the interest already earned.
Credit Utilization
The percentage of your available credit that you're currently using.
D
Debt Consolidation
Combining multiple debts into a single new loan, ideally at a lower overall rate.
Debt-to-Income Ratio (DTI)
The share of your gross monthly income that goes toward debt payments.
Diversification
Spreading investments across different assets so no single one can sink the whole portfolio.
Dividend Yield
The annual dividend income an investment pays, as a percentage of its price.
Dollar-Cost Averaging (DCA)
Investing a fixed amount on a regular schedule, regardless of price.
Down Payment
The upfront cash a buyer puts toward a purchase, with the rest financed by a loan.
E
F
G
H
I
L
M
N
O
P
Personal Allowance
The amount of income a UK taxpayer can earn each year before paying any Income Tax.
PMI (Private Mortgage Insurance)
Insurance a lender requires when a down payment is below a certain threshold, protecting the lender if the borrower defaults.
Principal
The original amount borrowed or invested, before interest.
Purchasing Power
How much a given amount of money can actually buy.
R
Real vs. Nominal Return
Nominal return is the raw percentage gain; real return subtracts inflation to show actual purchasing-power growth.
Refinancing
Replacing an existing loan with a new one, usually to get a better rate, lower payment, or different term.
Rule of 72
A quick mental-math shortcut for estimating how long it takes an investment to double.
S
Safe Withdrawal Rate
The percentage of a retirement portfolio you can withdraw each year with a low risk of running out of money.
Sequence of Returns Risk
The danger that a market downturn early in retirement does outsized damage to how long savings last.
Simple Interest
Interest calculated only on the original principal, never on interest already earned.
Stamp Duty (SDLT)
A UK tax paid by the buyer on property purchases above a set price threshold.