Reference
Financial Glossary
Every financial term you need to know, explained in plain English. No jargon, no confusion.
46 terms found
Amortization
The process of paying off a debt (like a mortgage) through regular payments over time. A 25-year amortization means you'll pay off the loan in 25 years.
Asset Allocation
How you divide your investments between different types (stocks, bonds, cash). For example, 80% stocks and 20% bonds.
Bear Market
When the stock market drops 20% or more from its recent high. It's normal and temporary — markets always recover.
Blue Chip
Large, well-established, financially stable companies. In Canada, think Royal Bank, TD, or Shopify.
Bond
A loan you give to a government or company. They pay you interest and return your money at a set date. Lower risk than stocks.
Bull Market
When the stock market is rising and investor confidence is high. The opposite of a bear market.
Capital Gains
The profit you make when you sell an investment for more than you paid. In Canada, only 50% of capital gains are taxable (in non-registered accounts).
CCB (Canada Child Benefit)
Tax-free monthly payments from the government for families with children under 18. Amount depends on family income.
CESG (Canada Education Savings Grant)
The government matches 20% of your RESP contributions, up to $500/year per child. Free money for education savings.
Compound Interest
Interest earned on both your original money AND the interest it has already earned. The 'snowball effect' that makes investing powerful over time.
CPP (Canada Pension Plan)
A government retirement benefit funded by payroll deductions. Both you and your employer contribute. Payments start as early as age 60.
Credit Score
A number from 300-900 that shows how reliable you are with borrowing money. Higher is better. Affects loan approvals and interest rates.
Credit Utilization
The percentage of your available credit you're using. Keep it under 30% for a healthy credit score. If your limit is $5,000, keep your balance under $1,500.
Deductible (Insurance)
The amount you pay out of pocket before insurance kicks in. Higher deductible = lower premiums.
Diversification
Spreading your investments across different types, sectors, and countries to reduce risk. 'Don't put all your eggs in one basket.'
Dividend
A payment companies make to shareholders from their profits. Like getting paid just for owning the stock. Canadian dividends get preferential tax treatment.
EI (Employment Insurance)
Government program that provides temporary income if you lose your job, get sick, or take parental leave. Funded by payroll deductions.
Emergency Fund
Cash savings set aside for unexpected expenses (job loss, car repair, medical bills). Aim for 3-6 months of essential expenses.
Equalization Payment
In divorce, the process of splitting the increase in net family property that occurred during the marriage.
ETF (Exchange-Traded Fund)
A basket of investments (stocks, bonds) that trades on the stock market like a single stock. Low fees and instant diversification.
FHSA (First Home Savings Account)
A registered account for first-time homebuyers. Contributions are tax-deductible AND withdrawals for a home are tax-free. $8,000/year limit, $40,000 lifetime.
GIC (Guaranteed Investment Certificate)
A safe investment where you lock your money for a set period (1-5 years) at a guaranteed interest rate. CDIC insured up to $100,000.
GIS (Guaranteed Income Supplement)
Additional monthly payment for low-income seniors who receive OAS. Provides extra support for those with limited retirement income.
Gross Income
Your total income before any deductions (taxes, CPP, EI). The big number on your pay stub.
HISA (High-Interest Savings Account)
A savings account that pays higher interest than a regular savings account. Great for emergency funds. Some offer 3%+ in 2026.
Index Fund
A fund that tracks a market index (like the S&P 500 or TSX). Low fees because it's not actively managed. Most professional investors can't beat them.
Inflation
The rate at which prices increase over time. If inflation is 3%, something that costs $100 today will cost $103 next year.
Marginal Tax Rate
The tax rate on your NEXT dollar of income. Canada uses a progressive system — only income in each bracket is taxed at that rate.
MER (Management Expense Ratio)
The annual fee charged by a fund, expressed as a percentage. A 0.20% MER on $10,000 = $20/year. Lower is better.
Mortgage
A loan to buy a home, using the property as collateral. In Canada, terms are typically 5 years with 25-year amortization.
Net Income
Your income after all deductions. What actually lands in your bank account. Also called 'take-home pay.'
OAS (Old Age Security)
A monthly government payment for Canadians aged 65+. Based on years of residency, not work history. Maximum ~$727/month in 2026.
Portfolio
The total collection of all your investments. A well-diversified portfolio includes different asset types across various sectors and countries.
Premium (Insurance)
The amount you pay for insurance coverage, usually monthly or annually.
Principal
The original amount of money borrowed or invested, not including interest or returns.
RESP (Registered Education Savings Plan)
A tax-sheltered account for saving for a child's education. Government adds 20% grant (CESG) on contributions up to $2,500/year.
Robo-Advisor
An online platform that automatically builds and manages your investment portfolio based on your goals. Lower fees than human advisors.
RRSP (Registered Retirement Savings Plan)
A tax-advantaged retirement account. Contributions reduce your taxable income. Growth is tax-deferred. Withdrawals are taxed as income.
SIN (Social Insurance Number)
A 9-digit number needed for working, filing taxes, and accessing government programs in Canada.
Tax Bracket
Income ranges taxed at different rates. Canada uses a marginal system — only the income within each bracket is taxed at that rate.
Tax Credit
An amount that directly reduces your tax owing. More valuable than a deduction. Examples: basic personal amount, medical expenses, donations.
Tax Deduction
An amount subtracted from your income before tax is calculated. RRSP contributions and childcare expenses are common deductions.
TFSA (Tax-Free Savings Account)
A registered account where investments grow tax-free and withdrawals are never taxed. $7,000 annual limit in 2026. Total room since 2009: $95,000.
TSX (Toronto Stock Exchange)
Canada's main stock exchange. Home to major Canadian companies like the Big 5 banks, Shopify, and energy companies.
Volatility
How much an investment's price moves up and down. High volatility = bigger swings. Stocks are more volatile than bonds.
Withholding Tax
Tax your employer deducts from your pay and sends to the CRA on your behalf. When you file taxes, you may get some back as a refund.