Glossary

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Glossary term

Definition
Aggressive investor/aggressive investment mix The investor’s objective is to achieve high long-term growth. They are prepared to accept higher risk and volatility of returns in exchange for greater long-term returns.
AMP accredited financial planner In addition to professional financial planning qualifications, all AMP planners complete an AMP accreditation program as part of their ongoing professional education.

AMP planners complete the accreditation assessment annually.
Assets FIDO, Australian Securities & Investments Commission's (ASIC) consumer website, defines assets as 'The resources owned by a company, fund or person. Assets can be tangible, eg cash, investments, property and equipment, or intangible, for example goodwill, patents.'
Assessable income Gross income including salary and wages, dividends, interest and rent before any deductions are allowed. Assessable income also includes net capital gains, Eligible Termination Payments (ETP) and other amounts that are not ordinarily classed as income. Source: Australian Taxation Office (ATO)
Australian Bureau of Statistics (ABS) The central statistical authority for the Australian Government. The ABS provides the official national source of statistics for use by the government and the community.
Australian Securities & Investments Commission (ASIC) The Australian Securities & Investments Commission (ASIC) is an independent Australian government body that regulates financial markets, securities, futures and corporations.

ASIC enforces and regulates company and financial services laws to protect consumers, investors and creditors.
Average Weekly Ordinary Time Earnings (AWOTE) Average weekly ordinary time earnings – a measure of average wages used by the Australian Bureau of Statistics.
Balanced fund A fund or portfolio that invests across major asset classes ie cash, fixed interest, property and shares, domestically and internationally. It provides long-term capital growth and a reasonable level of income.
Balanced investor/balanced investment mix The investor’s main objective is to achieve balanced returns to meet their medium to long-term financial goals. They are prepared to accept some risk and some volatility of returns to achieve their long-term goals.
Before tax annual income for individuals Before tax annual income is assumed to be:
  • For salaried employees with no business ownership interest, this will be your current total annual salary package.
  • For salaried employees with a business ownership interest, this will be your current annual salary package plus or minus your share of the business' latest financial year profit or loss (before tax and after expenses).
  • For partners in a partnership, this will be your drawings plus or minus your share of the partnership's latest financial year profit or loss (before tax and after expenses).
  • For sole proprietors, this will be the gross business income, less the cost of goods sold and less all tax deductible business expenses.
Commissions An amount of money paid to a financial planner for providing advice about your financial product. The commission is paid directly from the price of the product and is frequently paid for the length of time an individual keeps a product (the colloquial term for this type of commission is ‘trail’).
Conservative investor/conservative investment mix The investor’s main objective is to achieve stability in their portfolio. They are prepared to accept lower returns in exchange for maintaining low risk and capital stability to achieve their goals.
Contributions Money paid into a superannuation fund. There are three types of contributions.
  1. Superannuation Guarantee Contributions (SGC) made by your employer. By law, SGC contributions are currently 9% of your annual income.
  2. Pre-tax contributions: additional personal contributions that you make to boost your SGC contributions (also known as salary sacrifice).
  3. Undeducted contributions: post-tax personal contributions that you make, eg a lump sum contribution from the sale of an asset (also known as after tax contributions).
Defensive assets Assets that typically provide lower levels of risk than other assets. The trade off is usually lower returns over the long term. An example of a defensive asset is investing in cash.
DEXX&R Australian research company operating in the superannuation, funds management and life insurance industries. DEXX&R provides research services for the Australian financial services industry.
Diversification The process where funds are spread across classes of assets, geographies and managers to distribute and control risk. As a result, the return on the portfolio as a whole varies less than the return on smaller lots of individual holdings.
Fees Money you are charged for services provided as part of the management of your product, to conduct a transaction on your product or for personal financial advice.
FIDO FIDO is the consumer website of the Australian Securities & Investments Commission (ASIC).
Future dollars ‘Today’s dollars’ is what an item or goal costs today. ‘Future dollars’ is an expression used to indicate the future cost of the same item or goal eg retirement. The cost of the goal is adjusted to reflect the increase in the price of items over time due to inflation. It is an estimate based on current information.
Government co-contributions An Australian Government initiative to assist eligible individuals to save for their retirement.

You may be eligible for the government co-contribution if you are:
  • an Australian resident
  • an employee
  • earn less than $58,980 a year
  • make personal after tax super contributions to a complying super fund.
If you are eligible for the co-contribution, the government contributes $1.50 for every $1 you put into your super, up to a maximum co-contribution of $1,500 a year.
Growth assets/growth investment mix Assets that typically provide higher levels of risk than other assets. The trade off is usually higher returns over the long term. An example of an aggressive asset is international shares or property.
Imputation credit Taxation credits shareholders may be entitled to when they receive franked dividends.
Inflation An increase in the volume of money and credit relative to available goods and services, resulting in a continuing rise in the general price level.
Investment mix The mix of assets your money is invested in to achieve your financial objectives. The mix is based on the time you have to achieve your objective and your risk tolerance.
Investor profile Also known as risk profile. An individual’s or an investment manager’s willingness to trade off the risk of losing money in exchange for higher returns over time.
Investment strategy An investment strategy is the combination of assets you invest in to achieve your goals within the timeframe you specify. The appropriate strategy will depend on your goal, the length of time you have to achieve the goals and your tolerance for risk (that you might lose money as well as grow your money).

A professional adviser can analyse these considerations and recommend the right strategy for you.
Long-term Generally, a period of five years or more.
Long-term investment An investment that generally matures in more than five years or is to be made over a period of five years or more.
Lump sum contributions An amount of money paid into your superannuation fund in one payment. It can be a before or after-tax payment.
Management fee The fees and costs for managing your product, specifically the amount you pay for specific investment options. This is money paid to the investment manager for managing your money.
Market An environment which is organised to facilitate exchange of products and services between buyers and sellers.
Medicare Levy A charge of 1.5% paid by resident taxpayers to fund the Australian national health system, known as Medicare.
Member An individual who contributes to a superannuation plan.
Moderately aggressive investor The investor’s main objective is to accumulate assets by targeting capital growth over the medium to long-term. They are prepared to accept higher volatility and moderate risks to achieve these returns.
Moderately conservative investor The investor’s main objective is to maintain relatively stable returns. Capital stability is still a priority, however, they are willing to accept some volatility to achieve these returns.
Non-concessional contributions The Australian Taxation Office describes ‘non-concessional contributions’ as contributions that are made from a person's after-tax income.

The terms 'non-concessional contributions', 'post-tax contributions' and 'after-tax contributions' are often used interchangeably. Source: Australian Taxation Office (ATO)
Product Disclosure Document (PDS) An offer document for a financial product. It contains information that a person would reasonably require to make a decision to acquire a financial product. This includes information about the product features, fees that apply, any adviser commission, benefits and risks of investing and what to do if you have a complaint.
Personal contributions Contributions made by an individual to their superannuation fund. For employees, personal contributions are amounts put into superannuation over-and-above the 9% compulsory superannuation guarantee contributions (SGC) that an employer makes on behalf of the employee. Contributions can be made using before or after-tax money.
Plan for Life Actuaries and providers of independent financial research in the Australian financial services industry.
Preservation age The age at which a person may acquire access to accumulated preserved superannuation benefits.
Projections An estimate of the outcome of an event or situation (such as a financial outcome) based on a specified set of conditions, specific data or trends.
Real rate of return The rate of return on an investment in excess of inflation. For example, if the rate of return is 10% but the inflation rate is 3%, the real return is 7%.
Rebate An amount of money refunded to an individual if a particular event occurs or a condition is fulfilled. For example if someone’s superannuation balance exceeds a specified amount.
Return The total earned from an investment including capital growth, or loss, and income.
Risk In investment terms, risk is a measure of the volatility of returns.
Risk profile Also known as investor profile. An individual’s or an investment manager’s willingness to trade off the risk of losing money in exchange for returns over time.
Salary An amount paid to someone in exchange for services eg money in exchange for work services.
Salary sacrifice When an employer makes contributions into a super fund from an employee's salary before deducting Pay As You Go (PAYG) tax. The contributions are made at the employee's request. The employee's contribution is maximised by using pre-tax dollars and the fund is taxed at only 15%, instead of your marginal rate of up to 45% plus 1.5% Medicare levy.
Short-term investment An investment that generally matures or is intended to operate for less than two years.
Simulator A tool, calculation or experiment to recreate a specific situation in test conditions to model or monitor the outcome/what happens.

My super simulator is a calculator tool that takes information from the user, based on a range of questions, and estimates the superannuation outcome over time, subject to certain assumptions, such as economic and market performance conditions.
Superannuation A pension or payment to a person retiring from work on reaching the preservation age. The term also refers to the accumulating contributions by employers and employees to a superannuation fund.
Superannuation contributions Amounts invested into a superannuation fund.
Superannuation Guarantee Charge (also known as ‘compulsory super’) The Superannuation Guarantee Charge (SGC) is a mechanism to ensure that employers contribute at least 9% of an employee’s salary to a superannuation fund or Retirement Savings Account (RSA). The SGC is the penalty imposed on an employer if they do not pay the required superannuation guaranteed contributions.
Tax A contribution made by people to fund the services provided by the government, such as transport, education or health services.

The most common tax is income tax, which is a contribution made from income. The amount is usually a percentage of income that is determined by the amount of income earned.
Today’s dollars The amount of money required for paying for something today, at current prices.

The term is often used when referring to something that will happen in the future - when the same thing is likely to cost more in actual dollars - to give the user a sense of the relative cost, using today’s prices as a reference guide.
Trails/planner trails See commissions.
Undeducted contributions The Australian Taxation Office (ATO) describes an undeducted contribution as, 'a personal superannuation contribution for which you are not eligible to claim a tax deduction. Undeducted contributions are not subject to any taxation when initially paid to the fund and not taxed when paid as an end benefit.'
Working test/work test A government test for people aged 65 to 74 that stipulates the minimum number of hours a person must work in a year in order to be eligible to make non-concessional superannuation contributions. Currently, people must work 40 hours in a 30-day consecutive period during the year.
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