Your cheat-sheet to financial lingo

With legislative changes and the complexity of investments and super, it’s hard to keep up with all the financial terms used so we’ve put together a cheat-sheet of some of the commonly used terms in financial services.

Concessional contributions: previously known as deductible contributions, these include superannuation contributions made from pre-tax income and are concessionally taxed. Employer superannuation guarantee contributions, salary sacrifice contributions and contributions made by the self-employed for which they can claim a tax deduction are all classed as concessional contributions.

Dependant: generally the member’s spouse (including de facto) or child, or any other person who is financially dependent or interdependent with the member.

Growth assets: assets such as shares and property which are expected to increase in value over the long term.

Imputation (franking) credits: taxation credits which are passed on to shareholders (including superannuation funds) from companies which have already paid tax on profits before dividends are paid.

Investment risk: the variability of returns. Generally the higher the potential return, the greater the risk of loss.

Preserved benefits: superannuation benefits that cannot be accessed until a specified condition of release has been met. It is usually mandatory that benefits be preserved until the individual has retired and is aged between age 55 and 60 (depending on date of birth) or has reached age 65.

Salary sacrifice: an amount of pre-tax salary that an employee decides to contribute to super instead of taking as cash salary. This is in addition to the compulsory super guarantee contributions that are made by the employer on behalf of an employee.

Super co-contribution: an Australian Government initiative to help individuals save for their retirement. If you are eligible and make personal contributions to your super, the Government will make a co-contribution on your behalf.