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Personal Finance Terms Glossary

Updated: Mar 1

If you have had a hard time understanding either posts on this websites or various other resources that discuss financial literacy (specifically Canadian financial literacy), you have come to the right place.

I have created a Personal Finance Terminology Glossary which breaks down the definition of each term in simple language for better understanding organized in alphabetical order for ease of access.

  • Bond: A type of investment that involves lending money to a corporation or government entity in exchange for regular interest payments and the return of the principal at maturity.

  • Capital Gains: The profit earned on the sale of an asset, such as stocks or real estate. In Canada, 50% of capital gains are taxed at your marginal tax rate.

  • Credit Score: A number that represents your creditworthiness, based on your credit history. In Canada, credit scores range from 300 to 900.

  • Debt: Money that you owe to someone else, such as a credit card balance, loan, or mortgage.

  • Dividends: Payments made by a corporation to its shareholders out of its profits.

  • Equity: The value of an asset, minus any debts or liabilities associated with it.

  • ETF: Exchange-Traded Fund, a type of investment that combines the features of a mutual fund and a stock. Like mutual funds, ETFs hold a diversified portfolio of assets, but they are traded like stocks on a stock exchange.

  • Fixed Expenses: Regular expenses that don't change from month to month, such as rent or a car payment.

  • GST: Goods and Services Tax, a federal tax of 5% in Canada that is added to most purchases.

  • Gross Income: The total amount of money you earn before taxes and other deductions are taken out.

  • HST: Harmonized Sales Tax, a combined federal and provincial sales tax in some Canadian provinces.

  • Index: A statistical measure of the performance of a group of stocks or bonds.

  • Interest: The cost of borrowing money, usually expressed as a percentage.

  • Liabilities: Debts or financial obligations that you owe to others.

  • Market Capitalization: The total value of a company's outstanding shares of stock, calculated by multiplying the current share price by the number of outstanding shares.

  • Mutual Fund: A type of investment that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other assets.

  • Net Income: The amount of money you earn after taxes and other deductions are taken out.

  • Overdraft: A negative balance in your bank account caused by spending more than you have available.

  • Portfolio: A collection of investments owned by an individual or organization.

  • PST: Provincial Sales Tax, a tax imposed by some provinces in Canada on top of the GST.

  • RESP: Registered Education Savings Plan, a type of savings account in Canada that allows you to save for your child's education and receive government grants.

  • Retirement Savings Plan (RRSP): A type of retirement account in Canada that offers tax benefits for contributions.

  • Risk Tolerance: An individual's willingness and ability to take on risk when investing.

  • Savings: Money set aside for future expenses or emergencies.

  • Sector: A specific industry or segment of the economy, such as technology or healthcare.

  • Stocks: Securities that represent ownership in a corporation. When you buy stocks, you become a shareholder in the company and can earn a return on your investment through dividends or price appreciation.

  • Tax Refund: Money returned to you by the government when you have overpaid your taxes.

  • Tax-Free Savings Account (TFSA): A type of savings account in Canada that allows you to save and earn interest tax-free.

  • Variable Expenses: Expenses that can change from month to month, such as groceries or entertainment.

  • Volatility: The degree of variation in an asset's price over time.

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