Annual percentage rate (APR)
A standardised annual borrowing-cost measure. Check which fees are included and whether the rate can change.
Reference
Personal finance knowledge base
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Custody
The arrangement for holding assets and records. Ask who the custodian is and what happens if an intermediary fails.
Deposit guarantee
Protection for eligible deposits up to applicable limits, subject to scheme and bank eligibility. It does not cover investment losses.
Diversification
Spreading exposure across different risks. More line items do not help when all respond to the same event.
Spread
The gap between buy and sell prices—a cost even when trading commission is zero.
Tracking difference
The gap between a product’s performance and its benchmark, caused by fees, replication and other factors.
Working capital
Short-term resources available to meet operating obligations. Profit does not necessarily mean cash is available.
Loan-to-value
The loan amount relative to an asset’s assessed value. Valuation and lender rules affect the calculation.
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