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Glossary of financial terms
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EXPLANATION OF FINANCIAL TERMS

Gearing

Used to measure a company's debt. Debt is expressed as a percentage of equity in a company's balance sheet. There is no absolute comparison but a figure of several hundred per cent probably means the company has either borrowed a lot of money or has no capital left.

Gilt-edged

An investment in Government debt. You get a modest level of interest on a reasonably safe investment. Also called gilt edged stock, Treasury stock. Gilts are issued by the Government in units of £100 and pay a fixed rate of interest to a fixed repayment day. Some are index-linked to protect investors against inflation. Private investors can buy gilts via the National Savings Stock Register at Post Offices or at stock brokers

Gross interest rate

The amount paid before any tax has been deducted. The net interest rate is the amount paid after Savings Tax of 20 per cent has been taken off. When comparing savings accounts it is important to make sure they are compared on the same basis. Most bank and building society accounts quote their rates gross, but rates on guaranteed income bonds and other types of insurance bonds are quoted net of basic-rate tax. Although they quote the gross rate, bank and building societies actually pay savers the net amount of interest on the assumption that they are tax payers.

Group personal pension scheme

A series of personal pension plans with one provider organised by an employer who may or may not make contributions

 


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