Investment Glossary

A dividend tax credit is a tax credit Canadian investors can apply against tax owed on gross dividend income generated through investments such as shares. In Canada, dividend tax credits are non-refundable, and foreign dividends to not qualify for the dividend tax credit.

An investing technique where fixed-amount investments are made at regular intervals in order to reduce average share cost. More shares are acquired when security prices are lower and fewer shares are acquired in periods of higher securities prices.

Income generated from employment, including wages, salary, tips, commissions and bonuses.  If your employer gives you an advance on your next check, this would be considered unearned income because you haven't yet done anything to earn it. Wages, salaries, and tips are considered to be earned income, as are disability benefits (prior to retirement), or net earnings from self-employment.

Pensions, alimony and child support, and interest on dividends are not considerd to be earned income.

An earnings statement is also known as an income statement or profit and loss statement, and is a regular report displaying the income and expenses of a business over a set period.  The earnings statement explains the owners' equity, the company’s assets after all liabilities have been subtracted. An earnings statement provides a useful benchmark for investigating and evaluating the performance of a company prior to investing.

Equity has several definitions and applications:

1. The net worth or book value of a company as determined by total assets minus total liabilities.
2. Ownership interest in a corporation in the form of common stock or preferred stock. Shares are often known as equities.
3. Total assets minus total liabilities
4. In real estate, the difference between what a property is worth and what the owner owes against that property

A mutual fund that invest primarily in stocks (stocks are often referred to as “equities”). Equity funds are usually focused on achieving long-term growth via capital gains. Different equity funds will often focus on different markets, which is why risk varies among equity funds. Index funds are said to be actively managed, while index funds are matched (or indexed) to specific stock market indices.

The value of a security or debt obligation at maturity, as stated by the issuer. Also known as the par value. The face value of bonds usually represents the principal or redemption value. Interest payments are expressed as a percentage of face value.

Before maturity, the actual value of a bond may be greater or less than face value, depending on the interest rate payable and the perceived risk of default. As bonds approach maturity, actual value approaches face value.

An individual or institution legally appointed to a position of trust, such as an executor or trustee, who manages assets on behalf another. The person who looks after the assets on the other's behalf is expected to act in the best interests of the person whose assets they are in charge of. This is known as "fiduciary duty". Typically, members of a company’s board of directors act as fiduciaries on behalf of shareholders.

Fiscal policy is the blanket term for spending and taxation tools used by government to manage the economy. Fiscal policy is generally aimed at fostering economic growth and reducing unemployment, while avoiding generating inflation. Fiscal policy can include public spending and tax cuts, or creating tax exemptions such as trusts.

The traditional view of fiscal policy emphasizes the direct impact of government revenue and spending on aggregate demand.

A tangible asset or piece of property a firm or company uses to generate revenue, and that will not be converted to cash in the short term. Fixed assets are regarded to have a future economic whose cost can be measured reliably, and typically include land, buildings, vehicle fleets, office equipment and furniture, and machinery. These tangible assets often receive better tax treatment, such as depreciation, compared to short-term assets.

Fixed asset management is the managing, tracking, maintaining and protecting fixed assets such as buildings and machinery for accounting purposes.

A fixed dollar withdrawal plan is an investment plan that produces payments of set sums of money at specified intervals, usually monthly or quarterly.

Fixed income investments are investments that regularly generate a set amount of income that does not change over the life of the investment.

Fixed income investments are popular because they generally can be expected to provide safety of principal, regular interest income, and the potential to generate capital gains whenever interest rates move lower, and help to reduce the overall risk of your investment portfolio.

There is a wide variety of fixed income investments including Government of Canada and Provincial Bonds, Federal Crown Corporation Bonds, corporate bonds, stripped bonds ("strips")and mortgage-backed securities.

Fixed liabilities are any debts, such as bonds or mortgages that will not mature within one year. Bonds, mortgages and loans that are payable over a term exceeding one year would be fixed liabilities.

A mutual fund scheme where the investor's holdings are depleted in entirety via regular withdrawals over a set period of time. Initial capital and accrued income will be exhausted at the end of the time period. A specific amount of capital, together with accrued income, is systematically exhausted.