International Banking Guide Continued
Stock market
Another term for stock exchange.
Switzerland
Tax haven for international investors, renowned for private banking
facilities. Home to more than £2.5 trillion worth of private
clients’ money.
Withholding tax that investors can ‘claw back’ if their
country of residence has a double taxation with Switzerland, means
a lot of money invested here is clean and quite substantial.
International Banking Guide Continued & Term Insurance
Term insurance
Life insurance that lasts for a limited period only - the ‘term’.
Premiums are small, compared to potential pay-out because insurers
expect you to survive.
Tiger market
Term to describe any emerging market that is growing aggressively,
but commonly used in relation to South-East Asian economies. Top-down
A macro-economic perspective of investment. Incorporates factors
such as political change, oil prices and currency risks (among others).
Traded endowment policy
An endowment policy that the holder has decided - or been forced
- to surrender. Good for expatriates to buy because they are only
subject to capital gains tax for the proportion of the time you
spend in the UK. And if you cash them in as a non-resident, you
won’t have to pay CGT at all.
International Banking Guide Continued & Ucits
Ucits
Undertakings for Collective Investments in Transferable Securities.
A European directive to facilitate the sale of collective investments
across borders in the EU.
Growing numbers of companies are forming funds in this structure
and basing them in Luxembourg and Dublin to sell to European investors.
Umbrella fund
Several funds under one banner between which investors can switch
without facing burdensome financial penalties.
Umbrella funds tend to be based in low-tax centres, such as the
Channel Islands, Luxembourg and Dublin.
Unit linking
When buying a life insurance policy, you take units, rather than
shares in that policy. The life company then takes your money and
invests in underlying assets such as equities, bonds and cash. The
value of your units will vary depending on the underlying investment
performance.
International Banking Guide Continued & Unit Trusts
Unit trusts
Unit Trusts pool investors’ money so that fund managers can
invest it on their behalf. This money is then invested in a wide
range of assets that will be more varied than the investor could
achieve independently. The idea is to make your investment grow
as quickly as possible. Unit trusts are designed to provide a straightforward,
inexpensive and convenient way into the stockmarket.
Volatility
The fluctuations of a given stock or market. The more volatile the
investment, the greater the risk of your investment losing money.
However, volatile shares are often the ones that deliver the greatest
returns.
Warrant
Warrants and call options for common stock are similar financial
tools.
Both allow holders to exercise the warrant/option up to expiration
date, in return for a certain number of shares.
Key differences are that options are issued by independent parties,
while the warrant is issued and guaranteed by the corporate issuer
itself.
The lifetime of a warrant is generally measured in years, while
the lifespan of an option tends to be months.
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